ANNUAL REPORT
NOVEMBER 30, 1996
[american century logo]
American
Century(sm)
AMERICAN
CENTURY
GROUP
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
[front cover]
TABLE OF CONTENTS
Report Highlights ..................................1
Our Message to You .................................2
Period Overview ....................................3
Strategic Allocation: Conservative
Performance Information .......................5
Management Q & A ..............................6
Schedule of Investments .......................9
Financial Highlights .........................47
Strategic Allocation: Moderate
Performance Information ......................15
Management Q & A .............................16
Schedule of Investments ......................19
Financial Highlights .........................48
Strategic Allocation: Aggressive
Performance Information ......................27
Management Q & A .............................28
Schedule of Investments ......................31
Financial Highlights .........................49
Statements of Assets and Liabilities ..............40
Statements of Operations ..........................41
Statements of Changes in Net Assets ...............42
Notes to Financial Statements .....................43
Independent Auditors' Report ......................50
Share Class and Retirement Information ............51
Background Information
Investment Philosophy & Policies .............52
Comparative Indices ..........................52
Lipper Rankings ..............................52
Glossary ..........................................53
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your needs, American Century funds have
been divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.
American Century Investments -- Family of Funds
Benham Group American Century Group Twentieth Century Group
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
We welcome your comments or questions about this report. See the back cover for
ways to contact us by mail, phone or e-mail.
Twentieth Century and The Benham Group are registered marks of American Century
Services Corporation and Benham Management Corporation, respectively. American
Century is a service mark of American Century Services Corporation.
American Century Investments
REPORT HIGHLIGHTS
Period Overview
o The major U.S. stock indices rose more than 20% during the year ended
November 30, 1996. However, large-cap stocks had substantially higher
returns than small-cap stocks.
o Despite a somewhat volatile year, U.S. bonds finished with slightly
positive returns. After suffering declines during the first half of 1996,
bonds rebounded in October and November.
o Foreign stock markets performed well overall, but the weakest returns
occurred in Japan and the U.K., the two largest markets outside of the U.S.
o Foreign bond markets benefited from government deficit-reduction efforts
and interest rate cuts by many of the world's central banks.
o The U.S. dollar strengthened against most major foreign currencies,
reducing returns from foreign investments.
Strategic Allocation: Conservative
o The fund underperformed its Lipper peer group average since inception.
o The fund had a fairly neutral asset mix during the period, though we
expanded its U.S. bond holdings in the summer.
o Going forward, we see more value overseas than we do domestically. Foreign
stocks should benefit from improving global economies and increased fiscal
responsibility. We're more wary of the U.S. stock market, although we see
some value among small-cap stocks.
o We expect moderating economic growth to result in a fairly stable U.S. bond
market, but we are keeping an eye on inflation and congressional budget
reform.
Strategic Allocation: Moderate
o The fund underperformed its Lipper peer group average since inception.
o The fund was neutrally positioned for the first part of the period, but we
cut back on the fund's U.S. stocks later in the period and expanded its
foreign stock holdings.
o Going forward, we see more value overseas than we do domestically. Foreign
stocks should benefit from improving global economies and increased fiscal
responsibility. We're more wary of the U.S. stock market, although we see
some value among small-cap stocks.
Strategic Allocation: Aggressive
o The fund underperformed its Lipper peer group average since inception.
o The fund was neutrally positioned for the first part of the period, but we
cut back on the fund's U.S. stocks later in the period and expanded its
foreign stock holdings.
o Going forward, we see more value overseas than we do domestically. Foreign
stocks should benefit from improving global economies and increased fiscal
responsibility. We're more wary of the U.S. stock market, although we see
some value among small-cap stocks.
Conservative
INVESTOR CLASS
Total Returns:AS OF 11/30/96
6 Months 6.34%*
Inception 7.02%
Net Assets:$33.1 million
(AS OF 11/30/96)
Inception Date: 2/15/96
Ticker Symbol: TWSCX
Moderate
INVESTOR CLASS
Total Returns:AS OF 11/30/96
6 Months 6.59%*
Inception 9.91%
Net Assets:$57.8 million
(AS OF 11/30/96)
Inception Date: 2/15/96
Ticker Symbol: TWSMX
Aggressive
INVESTOR CLASS
Total Returns:AS OF 11/30/96
6 Months 5.74%*
Inception 10.60%
Net Assets:$46.3 million
(AS OF 11/30/96)
Inception Date: 2/15/96
Ticker Symbol: TWSAX
* Not annualized.
Annual Report Report Highlights 1
OUR MESSAGE TO YOU
[photo of James E. Stowers III]
The fiscal year ended November 30, 1996, was an eventful one, both in the
global financial markets and for our company. The U.S. stock market rallied to
all-time highs in late spring and from late summer into fall. After a rocky
period in the first half of the year, U.S. bonds stabilized during the summer
and enjoyed a rebound in October and November. Foreign stock and bond markets
also produced positive returns during the period. In the following pages, our
investment management team provides further details about the markets and how
your fund was managed during the period.
On the corporate front, we completed the operational integration of Twentieth
Century and The Benham Group in September. As a result, you now have direct
access to a broader spectrum of funds and services.
We also changed the name of our company. On January 1, 1997, we began serving
you as American Century Investments, which reflects our expanded identity and
the independent thinking common to Twentieth Century and Benham. American
Century's fund family is divided into three groups--the Benham Group, the
American Century Group and the Twentieth Century Group. The Strategic Asset
Allocation funds have moved into the American Century Group because the funds'
investment characteristics--diversification and asset allocation--match key
attributes of that group.
This report is the first in a new annual report format designed using your
input. We hope you find it more informative and easier to read. Another
informative resource is the American Century Web site. If you use a personal
computer and have Internet access, we've made it easier for you to download
information about American Century funds and access your fund accounts. With a
personal access code, you can view account balances, exchange money between
existing accounts and make additional investments. The Web site address is:
www.americancentury.com. We are one of the first fund companies to offer direct
on-line transactions via the Internet.
We also began to offer two classes of shares for many of our funds, including
the Strategic Asset Allocation funds. One class (the Investor Class) is designed
for investors who buy directly from us, and the other (the Advisor Class) is
designed for investors who buy through certain financial intermediaries. We've
introduced the Advisor Class so that financial intermediaries can be compensated
for the additional services they provide.
These are examples of how we continue to work to provide information and
services that are useful and convenient to investors in our funds. Thank you for
investing with us.
Sincerely,
/s/James E. Stowers III
James E. Stowers III
President and Chief Executive Officer
2 Our Message To You American Century Investments
PERIOD OVERVIEW
U.S. Stocks
Repeating their 1995 performance, U.S. stocks posted strong returns in 1996.
For the year ended November 30, 1996, the major U.S. stock indices (such as the
S&P 500 and Nasdaq Composite) produced returns in excess of 20% and repeatedly
reached record highs throughout the year.
Strong corporate earnings growth was the main reason for the 1995 stock
rally, but this year's gains were driven primarily by incoming cash flows.
Investors poured more than $200 billion into stock mutual funds in 1996, nearly
doubling the record set in 1993. This remarkable demand pushed stock prices
higher and prompted a slew of stock offerings from both established and newly
public companies.
Although U.S. stock returns were strong across the board, changing investor
behavior led to a divergence between the performance of large-capitalization
stocks (such as those in the S&P 500) and small-capitalization stocks (such as
those in the Russell 2000). Evidence of weaker economic growth in the last three
months of the period fueled concerns about slowing earnings growth. As a result,
many investors migrated to the largest, most liquid companies available, and
this "flight to quality" pushed large-cap stocks up dramatically. Between
September and November, the S&P 500 surged by more than 16%, while the small-cap
Russell 2000 rose by less than 7% during the same period (see the accompanying
table for one-year returns).
Financial and consumer stocks were among the top-performing industry
sectors, along with selected technology shares. Lagging sectors included steel
companies and electric utility stocks.
U.S. Bonds
It was a "coupon-clipping" year in the U.S. bond market--slight bond price
losses during the year ended November 30 were largely offset by interest coupon
payments. For example, the two-year Treasury note posted a total return of 5.17%
during the period, while the 30-year Treasury bond returned 3.66% (see the
accompanying table for broad bond index returns).
However, the sedate returns masked some bond market volatility during the
period. After falling in late 1995, bond yields soared in the first and second
quarters of 1996 when signs of stronger economic growth sparked inflation fears.
The 30-year Treasury bond yield, which had fallen as low as 6% in January, rose
above 7% by May as the market priced in a short-term interest rate increase by
the Federal Reserve. This change in yield equated to a bond price decline of
more than 12%.
Bonds traded listlessly throughout the summer, reflecting the market's
uncertainty about the economic outlook. But the Fed held short-term interest
rates steady through the end of the period, and increasing evidence of
moderating economic growth ultimately convinced the bond market that a rate hike
was unnecessary. This conclusion sparked a substantial rebound in the bond
market--Treasury yields fell across the maturity spectrum throughout October and
November.
Mortgage-backed securities, with their higher yields, were the top-performing
fixed-income sector during the period. Among other bond sectors, corporate bonds
outperformed Treasury and government securities. The strengthening economy led
to improving business conditions and better credit quality among corporate
securities, which in turn enhanced the price gains of corporate bonds.
U.S. STOCK MARKET PERFORMANCE
For the one-year period ended November 30, 1996
S&P 500 27.87%
Russell 2000 16.52%
U.S. BOND MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Salomon Brothers Broad
Investment Grade Bond Index 5.98%
Lehman Aggregate Bond Index 6.07%
Annual Report Period Overview 3
PERIOD OVERVIEW
Foreign Stocks
Global stock returns were mixed but generally positive during the year ended
November 30. Although a number of foreign equity markets experienced gains that
rivaled or exceeded those of the U.S. stock market, the Morgan Stanley EAFE(R)
Index--a broad measure of international stock performance--returned just 11.76%
(in U.S. dollar terms) during the period.
Part of the EAFE(R)'s underperformance relative to the U.S. stock market was
a result of the stronger U.S. dollar. The dollar rose by 6% against the German
mark and 13% against the Japanese yen during the year. But even if the currency
translation is eliminated (see the accompanying table), the EAFE(R)'s return
still fell short of the U.S. stock market's performance. The main reason was the
performance of the two largest EAFE(R) components, Japan and the United Kingdom.
These two markets, which together make up more than half of the EAFE(R),
produced fairly modest gains compared to those in the U.S. and elsewhere.
Among specific countries, the stock markets in northern Europe posted strong
gains, with the Netherlands, France and the Scandinavian countries each
returning more than 30%. Several Eastern European countries, including Poland
and the Czech Republic, also produced solid returns. Hong Kong was the top
performer among Asian markets, while the Venezuelan stock market led the
emerging markets with a return of over 200% during the period (reduced to just
under 100% by currency losses).
Foreign Bonds
In general, foreign bond markets outperformed the U.S. bond market during the
year ended November 30, but currency losses evened the score for U.S. investors.
The Salomon Brothers Non-U.S. World Government Bond Index, a broad index of
foreign bonds, posted a total return of 5.72% in U.S. dollar terms during the
one-year period, compared with a 5.98% return for the Salomon Brothers Broad
Investment Grade Bond Index, a broad index of domestic bonds. But in local
currencies, the foreign bond index returned 10.70%.
Many foreign bond markets, especially those in Europe, benefited from slow
economic growth and a trend toward fiscal responsibility. Most European
governments spent the past year lowering short-term interest rates while trying
to reduce their budget deficits before European Economic and Monetary Union
(EMU) occurs in 1999. Lower rates and smaller deficits are both favorable for
bond prices, and market returns reflected these conditions.
The best performers during the one-year period were the "high-yielding"
countries in western Europe (Italy, Spain, Sweden). In the past, bond issuers in
these countries were forced to pay higher yields on their bonds because of the
threat of currency devaluations. However, the currency concerns are disappearing
because these countries are expected to join EMU, which will have a more stable
currency. As a result, the yields in these countries are converging with the
rest of the continent. Two years ago, Italian 10-year bonds were yielding around
12%, while comparable German bonds had a yield of 7%. More recently, Italian
bonds yielded about 8%, compared to a 6% yield for German bonds. This spread
should continue to narrow as EMU approaches.
FOREIGN STOCK MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Morgan Stanley EAFE(R)Index (in U.S. dollars) 11.76%
Morgan Stanley EAFE(R)Index (in local currencies) 16.62%
FOREIGN BOND MARKET PERFORMANCE
For the one-year period ended November 30, 1996
Salomon Brothers Non-U.S. World Government
Bond Index (in U.S. dollars) 5.72%
Salomon Brothers Non-U.S. World Government
Bond Index (in local currencies) 10.70%
4 Period Overview American Century Investments
STRATEGIC ALLOCATION: CONSERVATIVE
CUMULATIVE TOTAL RETURNS (as of November 30, 1996)(1)
6 MONTHS LIFE OF FUND
INVESTOR CLASS(2) (inception 2/15/96)
Strategic Allocation: Conservative .............. 6.34% 7.02%
S&P 500(3) ...................................... 14.41% 18.17%
Lehman Aggregate Bond Index(3) .................. 7.31% 5.75%(5)
Three-Month U.S. Treasury Bill(3) ............... 2.55% 3.82%(5)
Average Income Fund(4) .......................... 7.48% 10.31%
ADVISOR CLASS(2) (inception 10/2/96)
Strategic Allocation: Conservative ............................... 3.34%
S&P 500(3) ....................................................... 9.08%
Lehman Aggregate Bond Index(3) ................................... 3.97%
Three-Month U.S. Treasury Bill(3) ................................ 0.83%
(1) Returns are defined in the Glossary on page 53.
(2) See page 51 for share class descriptions.
(3) See page 52 for more information about these comparative indices.
(4) According to Lipper Analytical Services. See page 52 for more information
on Lipper and the fund's category.
(5) Return since 2/29/96, the date closest to the fund's inception date for
which index return data is available.
<TABLE>
[line graph - data below]
GROWTH OF $10,000 OVER THE LIFE OF THE FUND
S&P 500 Lehman Aggregate 3-Month T-Bill Strategic: Conservative
<S> <C> <C> <C> <C> <C>
2/29/96 $10000 $10000 $10000 $10000
3/31/96 10133 9930 10041 10040
4/30/96 10269 9875 10082 10145
5/31/96 10504 9855 10125 10186
6/30/96 10586 9987 10167 10221
7/31/96 10102 10014 10211 10037
8/31/96 10292 9997 10254 10160
9/30/96 10911 10172 10297 10440
10/31/96 11197 10397 10339 10584
11/30/96 12018 10575 10382 10832
</TABLE>
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Data quoted is for Investor Class only; performance for other
classes will vary due to differences in fee structures (see the Cumulative Total
Returns table above). The chart begins on 2/29/96 because it is the date closest
to the fund's 2/15/96 inception date for which index return data is available.
The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the total
return lines of the indices do not.
[pie chart]
ASSET ALLOCATION (as of November 30, 1996)
Percent of Fund Investments
U.S. Stocks 30.7%
Foreign Stocks 8.7%
U.S. Bonds 39.3%
Foreign Bonds 5.6%
Money Market Securities 15.7%
See page 52 for the fund's neutral asset mix.
Annual Report Strategic Allocation: Conservative 5
STRATEGIC ALLOCATION: CONSERVATIVE
Management Q & A
An interview with Jeff Tyler, vice president and lead portfolio manager of
American Century Strategic Allocation: Conservative.
How did the fund perform?
From its inception date on February 15, 1996, through November 30, 1996,
the fund's Investor Class shares posted a total return of 7.02%, compared with
the 10.31% average return of the 47 "Income Funds" tracked by Lipper Analytical
Services. (See the table on the previous page for other fund performance
comparisons.)
Why did the fund underperform its peer group average?
One reason is the fund had a higher-than-normal percentage of its assets in
cash during the first few months of its existence. Second, the fund's asset
allocation structure is a little more conservative--that is, it holds fewer
stocks--than most of the funds in this group, and this tends to be a handicap
when stocks are the best-performing sector, as they have been since the fund's
inception. In addition, the fund has a relatively rigid asset allocation
structure, whereas many of its "peers" have a great deal of flexibility in their
asset selection.
Within its operating ranges, has the fund's asset mix changed much since its
inception?
As I mentioned before, the fund had a relatively high cash balance early in
the period. Once the excess cash was put to work, the fund was slightly
overweighted in U.S. bonds, which offered good relative value after suffering
losses during the first half of 1996. We also reduced the fund's U.S. stock
holdings to pursue relatively attractive values in foreign equities. By the end
of the period, we returned the fund to a roughly neutral asset mix. However, we
have maintained a slight shading toward foreign stocks within the fund's equity
component.
Do you plan to continue this asset mix going forward?
Yes. We currently see more value overseas, so we'll probably maintain the
fund's current foreign stock and bond positions.
You mentioned that you had cut back on the fund's U.S. stock position over the
past six months, but now you've taken a more neutral position. What's your
outlook for domestic stocks?
Conditions remained favorable for U.S. stocks during the last six
months--economic growth moderated, inflation remained low, corporate earnings
growth held up and cash flows kept pouring into the market. But after the
market's 75% gain over the past two years, we have some concerns about domestic
stocks. Our two biggest concerns going forward are the possibility of slowing
corporate earnings growth and rising labor costs. A slower U.S. economy will
likely lead to a slowdown in the growth of corporate profits, and the recent
record lows in unemployment suggest that we could see increased wage pressures
in 1997.
Despite these reservations, we do see some potential value in the domestic
stock market, especially among smaller companies. Small-cap stocks have lagged
their large-cap counterparts in recent months and are therefore relatively
attractive. The catalyst for a small-cap stock rally may be capital gains
legis-
6 Strategic Allocation: Conservative American Century Investments
STRATEGIC ALLOCATION: CONSERVATIVE
lation--if Congress passes a reduction in the capital gains tax rate, small-cap
stocks could benefit from increased demand for aggressive growth shares.
But you see more opportunities among international stocks?
Absolutely. Despite good returns over the past couple of years, foreign
stocks continue to look attractive to us from a relative value perspective.
Foreign markets should benefit from better economic conditions--while the U.S.
economy is slowing, economies in other parts of the world are just beginning to
rebound. Europe in particular should benefit from resurgent economic growth and
government deficit-reduction efforts. The one puzzling area is Japan, where the
stock market has been as inconsistent as the country's economic fortunes. We are
keeping a close eye on the Japanese economy because it has profound implications
for both foreign stock markets and the U.S. bond market.
What's the connection between the Japanese economy and the U.S. bond market?
In the U.S., economic growth and inflation have been relatively moderate
and steady over the past five years, at 2% and 3%, respectively. But the bond
market has been surprisingly volatile despite such calm economic conditions. One
of the main causes of this volatility has been the fluctuating demand for bonds
from foreign central banks, especially the Bank of Japan (BOJ).
FUND'S U.S. STOCKS (as of November 30, 1996)
Number of Companies 175
Dividend Yield 2.03%
Price/Earnings Ratio 20.8
% of Fund's % of
U.S. Stocks Fund
Top 5 U.S. Stocks
Exxon Corp. 3.2% 1.0%
Giant Food Inc. CI A 1.6% 0.5%
Dillard Department Stores, Inc. CI A 1.5% 0.5%
BellSouth Corp. 1.5% 0.5%
CSX Corp. 1.4% 0.4%
FUND'S FOREIGN STOCKS (as of November 30, 1996)
Number of Companies 61
Dividend Yield 1.48%
Price/Earnings Ratio 28.3
% of Fund's % of
Country Foreign Stocks Fund
Top 5 Foreign Stocks
Sandoz AG Switzerland 6.3% 0.6%
Sankyo Co. Ltd. Japan 5.9% 0.5%
Siebe plc U.K. 3.9% 0.3%
Telefonica de Espana Spain 3.6% 0.3%
SMH Swiss Corp. Switzerland 3.6% 0.3%
[pie chart]
Percent of Fund's Foreign Stocks
Europe 59.8%
Asia/Pacific 26.4%
Americas
(excluding U.S.) 13.8%
Annual Report Strategic Allocation: Conservative 7
STRATEGIC ALLOCATION: CONSERVATIVE
In an effort to pull the Japanese economy out of recession, the BOJ lowered
interest rates and took steps to weaken the Japanese currency. To weaken the
yen, the BOJ purchased U.S. dollars and invested them in U.S. bonds. As a
result, the BOJ has become a major factor in the U.S. bond market over the past
five years. If the Japanese economy recovers more fully in 1997, demand from the
BOJ for U.S. bonds would likely decline, and this could have a significant
impact on the domestic bond market and U.S. interest rates.
What else do you see in store for the U.S. bond market?
The U.S. economy slowed during the last half of 1996 from the rapid pace it
established earlier in the year. If these moderate economic conditions persist,
we expect bonds to trade in a fairly narrow range over the next few months.
However, we're watching a couple of factors closely. As I mentioned before,
we're concerned about the potential impact of rising labor costs on inflation.
We're also keeping an eye on Congress, which will consider a balanced federal
budget and entitlement reform in the coming year. The outcome of these debates
could have an effect on bond prices in 1997.
Why are the fund's foreign bond holdings concentrated in Europe?
European bonds should benefit from the progress that many European
governments have made toward reducing their budget deficits. Unfortunately, the
good news in Europe is offset by unfavorable scenarios in other global
fixed-income markets. In Japan, bond yields are at historic lows, providing
minimal income and little potential for price appreciation.
Investment terms are defined in the Glossary on page 53.
FUND'S U.S. BONDS (as of November 30, 1996)
Number of Issues 23
Weighted Average Maturity 6.70 years
Average Duration 4.46 years
[pie chart]
Percent of Fund's U.S. Bonds
U.S. Treasury Notes 53.4%
Mortgage-Backed Securities 22.2%
Corporate Bonds 17.4%
U.S. Treasury Bonds 6.3%
U.S. Government Agency Securities 0.7%
FUND'S FOREIGN BONDS (as of November 30, 1996)
Number of Issues 5
Weighted Average Maturity 5.87 years
Average Duration 5.01 years
[pie chart]
Percent of Fund's Foreign Bonds
Europe 94.1%
Americas (excluding U.S.) 5.9%
8 Strategic Allocation: Conservative American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE -- 0.7%
600 Boeing Co. $ 59,625
700 Litton Industries, Inc.(1) 32,725
900 Lockheed Martin Corp. 81,562
1,700 Raytheon Co. 86,913
-------
260,825
-------
AUTOMOBILES & AUTO PARTS -- 1.0%
100 Bayerische Motoren Werke
(BMW) ORD 64,824
1,000 Daimler-Benz AG ORD(1) 65,312
4,300 Ford Motor Co. 140,825
6,200 T & N plc ORD 19,704
2,000 Toyota Motor Corp. ORD 54,640
100 Volkswagen AG ORD 40,085
-------
385,390
-------
BANKING -- 2.7%
900 Bank of Nova Scotia ORD 31,246
800 Banque Nationale de Paris ORD 31,816
900 CS Holding AG ORD(1) 95,741
600 Chase Manhattan Corp. 56,700
600 Citicorp 65,550
700 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 30,485
3,000 First Virginia Banks, Inc. 145,875
700 KeyCorp 36,662
2,800 Mercantile Bancorporation Inc. 148,050
400 Morgan (J.P.) & Co. Inc. 37,750
2,700 PNC Bank Corp. 106,650
4,500 Royal Bank of Scotland
Group plc ORD 39,650
1,500 Sparbanken Sverige AB Cl A
ORD 24,795
600 State Street Boston Corp. 40,575
1,500 Wachovia Corp. 90,000
100 Wells Fargo & Co. 28,463
---------
1,010,008
---------
BIOTECHNOLOGY -- 0.7%
900 Amgen Inc.(1) 54,900
1,500 Centocor, Inc.(1) 41,625
900 Genetics Institute, Inc.(1) 60,975
1,400 Interneuron Pharmaceuticals,
Inc.(1) 27,650
Shares Value
- --------------------------------------------------------------------------------
1,200 Martek BioSciences Corp.(1) $ 21,000
500 Parexel International Corp.(1) 25,844
400 Quintiles Transnational Corp.(1) 24,300
-------
256,294
-------
BUILDING & HOME IMPROVEMENTS-- 0.3%
2,900 Masco Corp. 105,850
-------
BUSINESSSERVICES & SUPPLIES -- 1.2%
600 ABR Information Services,
Inc.(1) 25,725
3,100 AccuStaff, Inc.(1) 62,775
200 Adecco SA ORD 51,522
1,400 APAC Teleservices, Inc.(1) 66,675
100 BIS SA ORD 10,076
800 Concord EFS, Inc.(1) 23,450
900 Employee Solutions, Inc.(1) 16,594
1,600 First Data Corp. 63,800
200 Gartner Group, Inc. Cl A(1) 7,363
1,800 PMT Services, Inc.(1) 38,137
1,000 Robert Half International, Inc.(1) 37,250
1,100 ROMAC International, Inc.(1) 26,400
-------
429,767
-------
CHEMICALS & RESINS -- 1.6%
1,200 Air Products & Chemicals, Inc. 83,400
200 Akzo Nobel ORD 26,525
800 Dow Chemical Co. 67,000
700 Great Lakes Chemical Corp. 37,538
50 Henkel KGaA ORD(1) 2,438
13,000 Japan Synthetic Rubber Co. ORD 86,564
3,800 Lubrizol Corp. 116,850
6,700 Millennium Chemicals Inc.(1) 138,187
900 Nalco Chemical Co. 34,312
-------
592,814
-------
COMMUNICATIONS EQUIPMENT -- 1.6%
1,600 ADC Telecommunications, Inc.(1) 58,400
1,200 Ascend Communications, Inc.(1) 85,425
800 Comverse Technology, Inc.(1) 27,200
800 Davox Corp.(1) 30,500
1,300 Lucent Technologies, Inc. 66,625
2,000 Motorola, Inc. 110,750
1,000 PairGain Technologies, Inc.(1) 63,750
600 Premisys Communications, Inc.(1) 30,863
2,400 Tellabs, Inc.(1) 95,850
-------
569,363
-------
See Notes to Financial Statements
Annual Report Strategic Allocation: Conservative 9
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
November 30, 1996
Shares Value
- --------------------------------------------------------------------------------
Communications Services -- 2.7%
4,000 AT&T Corp. $157,000
4,200 BellSouth Corp. 169,575
8,700 Cable & Wireless plc ORD 69,634
600 Cincinnati Bell, Inc. 35,775
1,200 LCI International, Inc.(1) 39,150
2,300 MCI Communications Corp. 70,294
1,400 Omnipoint Corp.(1) 37,100
3,100 SBC Communications Inc. 163,138
1,750 Telefonica de Espana ADR 115,500
5,500 TELUS Corp. ORD 87,017
1,500 Worldcom Inc.(1) 34,781
-------
978,964
-------
COMPUTER PERIPHERALS -- 0.6%
1,200 Cascade Communications(1) 82,725
400 Ciprico Inc.(1) 5,400
1,000 Cisco Systems Inc.(1) 67,937
900 Diebold, Inc. 53,663
-------
209,725
-------
COMPUTER SOFTWARE & SERVICES -- 1.9%
600 CBT Group PLC ADR(1) 34,500
1,800 Cap Gemini Sogeti SA ORD(1) 85,386
800 Clarify, Inc.(1) 35,800
1,200 Computer Associates
International, Inc. 78,900
1,000 Compuware Corp.(1) 56,750
800 HBO & Co. 45,550
1,200 McAfee Associates, Inc.(1) 57,000
100 Microsoft Corp.(1) 15,694
4,500 Misys plc ORD 75,062
1,250 Oracle Systems Corp.(1) 61,406
1,000 Rational Software Corp.(1) 34,875
1,200 Transaction Systems
Architects, Inc.(1) 44,100
2,500 Vanstar Corp.(1) 68,125
-------
693,148
-------
COMPUTER SYSTEMS -- 0.4%
200 Dell Computer Corp.(1) 20,338
200 Gateway 2000, Inc.(1) 10,750
400 International Business
Machines Corp. 63,750
600 Sun Microsystems, Inc.(1) 34,913
-------
129,751
-------
Shares Value
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS -- 1.1%
700 Avon Products, Inc. $ 39,025
2,000 Canon, Inc. ORD 42,166
600 Colgate-Palmolive Co. 55,575
800 Gillette Company 59,000
1,200 Rexall Sundown, Inc.(1) 30,600
180 SMH Swiss Corporation for
Microelectronics and
Watchmaking Industries
Ltd. ORD 114,958
2,000 Uni-Charm Corporation ORD 48,316
-------
389,640
-------
DIVERSIFIED COMPANIES -- 1.0%
5,100 BBA Group plc ORD 29,843
5,000 Email Ltd. ORD 14,326
600 General Electric Co. (U.S.) 62,400
3,900 Granada Group plc ORD 56,693
4,000 Nikon Corp. ORD 48,843
7,700 Siebe plc ORD 122,937
4,600 Southcorp Holdings Ltd. ORD 15,126
-------
350,168
-------
ELECTRICAL & ELECTRONIC
COMPONENTS -- 1.0%
2,500 AMP, Inc. 95,625
2,000 Advantest Corp. ORD 85,387
3,000 Anicom, Inc.(1) 28,687
500 Intel Corp. 63,406
1,000 RadiSys Corp.(1) 45,625
1,000 Sony Corp. ORD 64,040
-------
382,770
-------
ENERGY (PRODUCTION
& MARKETING) -- 3.9%
1,800 Amoco Corp. 139,725
400 Atlantic Richfield Co. 55,650
2,800 British-Borneo Petroleum
Syndicate plc ORD 30,038
700 Burlington Resources Inc. 37,100
4,200 Cairn Energy plc ORD(1) 24,930
7,700 Canadian 88 Energy Corp. ORD(1) 34,236
1,600 Chevron Corp. 107,200
3,800 Exxon Corp. 359,575
4,200 MAPCO Inc. 141,750
100 Mobil Corp. 12,100
1,400 Murphy Oil Corp. 71,400
See Notes to Financial Statements
10 Strategic Allocation: Conservative American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
November 30, 1996
Shares Value
- --------------------------------------------------------------------------------
2,900 Renaissance Energy Ltd. ORD(1)$ 101,756
2,600 Rigel Energy Corp. ORD(1) 28,515
15,400 Santos Ltd. ORD 62,674
1,500 Seagull Energy Corp.(1) 34,313
500 Talisman Energy, Inc. ORD(1) 16,859
2,600 Tarragon Oil & Gas Ltd. ORD(1) 28,034
400 Texaco Inc. 39,650
2,600 Unocal Corp. 105,950
---------
1,431,455
---------
ENERGY (SERVICES) -- 0.3%
900 Baker Hughes Inc. 32,962
6,000 Saipem S.p.A. ORD 27,755
2,700 Smedvig ASA Cl A ORD 56,725
-------
117,442
-------
ENVIRONMENTAL SERVICES -- 0.7%
5,900 Browning-Ferris Industries, Inc. 158,562
700 Thermatrix Inc.(1) 6,606
1,300 USA Waste Services, Inc.(1) 41,925
500 United Waste Systems, Inc.(1) 16,813
1,000 WMX Technologies, Inc. 36,000
-------
259,906
-------
FINANCIAL SERVICES -- 0.5%
700 Acom Company, Ltd. ORD 30,746
800 Amresco, Inc.(1) 17,300
1,500 Federal National Mortgage
Association 61,875
600 Promise Company Ltd. ORD 30,043
866 Travelers Group, Inc. 38,970
-------
178,934
-------
FOOD & BEVERAGE -- 1.2%
1,200 Anheuser-Busch Companies, Inc. 50,850
6,225 Archer-Daniels-Midland 136,950
57 Cadbury Schweppes plc ORD 490
1,900 Hudson Foods, Inc. Cl A 34,675
1,600 Northland Cranberries, Inc. 36,000
21,100 Parmalat Finanziaria S.p.A. ORD 33,069
4,100 Ralcorp Holdings, Inc.(1) 80,463
1,900 Universal Foods Corp. 70,300
-------
442,797
-------
GLASS PRODUCTS -- 0.1%
1,000 HOYA CORP. ORD 37,510
------
Shares Value
- --------------------------------------------------------------------------------
HEALTHCARE -- 0.8%
1,400 Bausch & Lomb, Inc. $ 51,975
2,900 Baxter International, Inc. 123,250
2,600 Capstone Pharmacy
Services, Inc.(1) 27,950
1,000 Health Management
Associates, Inc.(1) 22,125
900 NCS HealthCare, Inc. Cl A(1) 24,750
1,300 OccuSystems, Inc.(1) 37,862
400 PhyCor, Inc.(1) 12,925
-------
300,837
-------
INDUSTRIAL EQUIPMENT
& MACHINERY -- 0.6%
500 Caterpillar Inc. 39,562
3,700 Cooper Industries, Inc. 153,550
500 Sidel, SA ORD 31,835
-------
224,947
-------
INSURANCE -- 2.2%
1,000 Allstate Corp. 60,250
400 American International Group, Inc. 46,000
700 Assurantieconcern Stad
Rotterdam ORD 27,580
1,300 CNA Financial Corp.(1) 139,750
2,000 Chubb Corp. (The) 108,500
200 General Re Corp. 33,750
1,500 NAC Re Corp. 54,750
3,100 SAFECO Corp. 129,425
800 Sampo Insurance Company Ltd.
ORD 58,211
2,200 St. Paul Companies, Inc. 129,525
500 UNUM Corp. 35,563
-------
823,304
-------
LEISURE -- 0.4%
13,300 Crown Ltd. ORD(1) 30,528
700 HFS, Inc.(1) 45,325
11,800 Ladbroke Group plc ORD 40,675
750 Studio Plus Hotels, Inc.(1) 12,938
1,600 Suburban Lodges of America,
Inc.(1) 27,300
-------
156,766
-------
MEDICAL EQUIPMENT & SUPPLIES -- 0.2%
1,000 Boston Scientific Corp.(1) 58,375
1,200 Neuromedical Systems, Inc.(1) 16,125
------
74,500
------
See Notes to Financial Statements
Annual Report Strategic Allocation: Conservative 11
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
November 30, 1996
Shares Value
- --------------------------------------------------------------------------------
METALS & MINING -- 0.1%
900 Reynolds Metals Co. $ 53,550
-------
PACKAGING & CONTAINERS -- 0.4%
5,600 Ball Corporation 137,200
-------
PAPER & FOREST PRODUCTS -- 0.9%
3,600 Chesapeake Corp. 109,800
2,100 Union Camp Corp. 103,163
3,600 Westvaco Corp. 101,700
-------
314,663
-------
PERSONAL SERVICES -- 0.3%
1,300 Equity Corporation
International(1) 27,300
1,400 Service Corp. International 42,175
1,100 Stewart Enterprises, Inc. 37,400
-------
106,875
-------
PHARMACEUTICALS -- 1.9%
1,000 Abbott Laboratories 55,750
700 American Home Products Corp. 44,975
1,500 Dura Pharmaceuticals, Inc.(1) 55,875
700 Johnson & Johnson 37,187
1,300 Jones Medical Industries, Inc. 52,325
600 Lilly (Eli) & Co. 45,900
300 Merck & Co., Inc. 24,900
174 Sandoz AG ORD 202,509
7,000 Sankyo Co Ltd. ORD 187,552
-------
706,973
-------
PUBLISHING -- 1.1%
3,600 American Greetings Corp. Cl A 101,925
1,500 Banta Corp. 35,812
1,200 Central Newspapers, Inc. Cl A 52,200
3,000 Hollinger, Inc. ORD 28,567
1,200 McClatchy Newspapers, Inc. 37,050
2,200 Quebecor Printing, Inc. ORD 40,105
4,800 VNU Tijdschriftengroep
Nederland ORD 97,897
-------
393,556
-------
RAILROADS -- 0.4%
3,500 CSX Corp. 163,625
-------
RESTAURANTS -- 0.1%
1,100 Rainforest Cafe, Inc.(1) 31,900
-------
Shares Value
- --------------------------------------------------------------------------------
RETAIL (FOOD & DRUG) -- 0.6%
1,500 Albertson's, Inc. $ 52,312
5,200 Giant Food Inc. Cl A 175,500
-------
227,812
-------
RETAIL (GENERAL MERCHANDISE) -- 0.9%
900 Dayton Hudson Corp. 34,988
5,700 Dillard Department Stores,
Inc. Cl A 174,563
200 Kohl's Corp.(1) 7,975
1,100 May Department Stores Co. 53,625
1,300 Penney (J.C.) Company, Inc. 69,875
-------
341,026
-------
RETAIL (SPECIALTY) -- 0.6%
1,200 Corporate Express, Inc.(1) 33,675
1,000 Cortefiel, S.A. ORD 30,467
1,000 Fastenal Co. 43,063
700 Home Depot, Inc. 36,487
300 PETsMART, Inc.(1) 7,725
1,000 U.S. Office Products Co.(1) 31,000
1,700 Wilmar Industries, Inc.(1) 38,888
-------
221,305
-------
TOBACCO -- 0.3%
1,200 Imasco, Ltd. ORD 29,701
700 Philip Morris Companies Inc. 72,188
-------
101,889
-------
TRANSPORTATION -- 0.1%
3,300 Stagecoach Holdings plc ORD 35,125
-------
UTILITIES (ELECTRIC) -- 2.1%
4,700 Florida Progress Corp. 152,163
4,300 Kansas City Power & Light Co. 121,475
2,800 Northern States Power Co. (Minn.) 131,950
5,200 Potomac Electric Power 135,200
1,600 Texas Utilities Electric Co. 63,200
3,900 Union Electric Co. 155,025
-------
759,013
-------
MISCELLANEOUS -- 0.2%
1,250 Apollo Group Inc. Cl A(1) 32,578
1,500 Corrections Corporation of
America(1) 37,313
------
69,891
------
TOTAL COMMON STOCKS-- 39.4% 14,457,278
(Cost $13,433,900) ----------
See Notes to Financial Statements
12 Strategic Allocation: Conservative American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
November 30, 1996
Shares/Principal Amount Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS
CHEMICALS & RESINS -- 0.1%
450 Henkel KGaA ORD $ 22,412
(Cost $25,283) ------
U.S. TREASURY SECURITIES
$ 400,000 U.S. Treasury Notes, 6.50%,
4-30-97 402,000
2,200,000 U.S. Treasury Notes, 5.00%,
2-15-99 2,172,500
1,500,000 U.S. Treasury Notes, 6.375%,
3-31-01 1,532,340
335,000 U.S. Treasury Notes, 6.625%,
7-31-01 345,784
1,725,000 U.S. Treasury Notes, 7.50%,
5-15-02 1,858,153
1,300,000 U.S Treasury Notes, 7.00%,
7-15-06 1,385,722
875,000 U.S. Treasury Bonds, 6.75%,
8-15-26 913,281
---------
TOTAL U.S. TREASURY SECURITIES -- 23.4% 8,609,780
(Cost $8,420,547) ---------
U.S. GOVERNMENT AGENCY SECURITIES -- 0.3%
100,000 FNMA, 7.60%, 1-10-97 100,220
(Cost $101,969) -------
MORTGAGE-BACKED SECURITIES(3)
99,680 FNMA Pool #250576, 7.00%,
6-1-26 99,074
184,723 GNMA Pool #001991, 9.00%,
4-20-25 194,358
295,718 GNMA Pool #422006, 7.50%,
5-15-25 300,390
544,030 GNMA Pool #416856, 7.50%,
10-15-25 552,642
197,122 GNMA Pool #372335, 7.50%,
4-15-26 200,236
Principal Amount Value
- --------------------------------------------------------------------------------
$ 100,586 GNMA Pool #402682, 7.50%,
6-15-26 $ 102,175
1,697,099 GNMA Pool #431942, 8.25%,
7-15-26 1,756,276
---------
TOTAL MORTGAGE-BACKED
SECURITIES-- 8.7% 3,205,151
(Cost $3,146,321) ---------
CORPORATE BONDS
100,000 Alcan Aluminium Ltd., 5.875%,
4-1-00 99,375
550,000 Citicorp, 7.125%, 5-15-06 568,563
500,000 Enron Corp., 6.75%, 7-1-05 503,125
500,000 First Bank System Inc., 7.625%,
5-1-05 533,125
200,000 Ford Motor Credit Co., 6.125%,
1-9-06 192,750
200,000 Lockheed Martin Corp., 6.85%,
5-15-01 205,000
300,000 MBNA Corp., 6.875%, 6-1-05 302,625
100,000 Sears, Roebuck & Co., 6.00%,
5-1-00 99,500
---------
TOTAL CORPORATE BONDS-- 6.8% 2,504,063
(Cost $3,224,709) ---------
SOVEREIGN GOVERNMENTS & AGENCIES
CAD 150,000 Government of Canada, 7.25%,
6-1-03 121,394
FRF 1,000,000 Government of France, 8.50%,
4-25-03 226,934
JPY 60,000,000 Republic of Italy, 3.50%,
6-20-01 569,574
DEM 1,100,000 Treuhandanstalt, 7.375%,
12-2-02 797,321
GBP 200,000 United Kingdom Treasury,
8.00%, 6-10-03 351,223
---------
TOTAL SOVEREIGN
GOVERNMENTS & AGENCIES-- 5.6% 2,066,446
(Cost $1,227,466) ---------
See Notes to Financial Statements
Annual Report Strategic Allocation: Conservative 13
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: CONSERVATIVE
November 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER(2)
$ 520,000 American Family Financial
Services, 5.24%, 2-13-97 $ 514,238
800,000 Caisse d'Amortissment de la
Dette Sociale, 5.17%, 12-4-96 799,648
500,000 General Re Corp., 5.17%,
12-16-96 498,858
715,000 Hitachi Credit Corp., 5.17%,
12-23-96 712,671
650,000 IMI Funding Corp. (USA), 5.24%,
2-18-97 642,330
650,000 Kingdom of Sweden, 5.25%,
2-3-97 643,741
1,200,000 National Australia, 5.25%,
1-7-97 1,193,401
350,000 Southwestern Bell, 5.17%,
12-24-96 348,815
---------
TOTAL COMMERCIAL PAPER-- 14.6% 5,353,702
(Cost $5,353,985) ---------
TEMPORARY CASH INVESTMENTS -- 1.1%
Repurchase Agreement, Merrill Lynch & Co.
Inc., (collateralized by U.S. Treasury
obligations), in a joint trading account at
5.50%, dated 11-29-96, due 12-2-96
(Delivery value $400,183) 400,000
(Cost $400,000) --------
TOTAL INVESTMENT SECURITIES -- 100.0% $36,719,052
(Cost $35,334,180) ===========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain
149,638 CHF 12-31-96 $115,043 $1,262
389,171 DEM 12-30-96 253,474 2,156
515,966 FRF 12-31-96 98,820 1,111
22,759,125 JPY 12-30-96 200,810 2,346
62,919 NLG 12-31-96 36,530 322
-------- ------
$704,677 $7,197
======== ======
(Value on Settlement Date $711,874)
Notes to Schedule of Investments
ADR = American Depositary Receipt
CAD = Canadian Dollar
CHF = Swiss Franc
DEM = German Mark
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GNMA = Government National Mortgage Association
JPY = Japanese Yen
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
(1) Non-income producing
(2) Rates disclosed represent effective yield to maturity as of November 30,
1996.
(3) Final maturity indicated. Expected remaining average life used for purposes
of calculating the weighted average portfolio maturity.
See Notes to Financial Statements
14 Strategic Allocation: Conservative American Century Investments
STRATEGIC ALLOCATION: MODERATE
CUMULATIVE TOTAL RETURNS (as of November 30, 1996)(1)
6 MONTHS LIFE OF FUND
INVESTOR CLASS(2) (inception 2/15/96)
Strategic Allocation: Moderate ................. 6.59% 9.91%
S&P 500(3) ..................................... 14.41% 18.17%
Lehman Aggregate Bond Index(3) ................. 7.31% 5.75%(5)
Three-Month U.S. Treasury Bill(3) .............. 2.55% 3.82%(5)
Average Balanced Fund(4) ....................... 9.44% 14.26%
ADVISOR CLASS(2) (inception 10/2/96)
Strategic Allocation: Moderate ................. -- 3.44%
S&P 500(3) ..................................... -- 9.08%
Lehman Aggregate Bond Index(3) ................. -- 3.97%
Three-Month U.S. Treasury Bill(3) .............. -- 0.83%
(1) Returns are defined in the Glossary on page 53.
(2) See page 51 for share class descriptions.
(3) See page 52 for more information about these comparative indices.
(4) According to Lipper Analytical Services. See page 52 for more information
on Lipper and the fund's category.
(5) Returns since 2/29/96, the date closest to the fund's inception date for
which index return data is available.
<TABLE>
[line graph - data below]
GROWTH OF $10,000 OVER THE LIFE OF THE FUND
S&P 500 Lehman Aggregate 3-Month T-Bill Strategic: Moderate
<S> <C> <C> <C> <C>
2/29/96 $10000 $10000 $10000 $10000
3/31/96 10133 9930 10041 110081
4/30/96 10269 9875 10082 110314
5/31/96 10504 9855 10125 110394
6/30/96 10586 9987 10167 110411
7/31/96 10102 10014 10211 110085
8/31/96 10292 9997 10254 110309
9/30/96 10911 10172 10297 110650
10/31/96 11197 10397 10339 110773
11/30/96 12018 10575 10382 111080
</TABLE>
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Data quoted is for Investor Class only; performance for other
classes will vary due to differences in fee structures (see the Cumulative Total
Returns table above). The chart begins on 2/29/96 because it is the date closest
to the fund's 2/15/96 inception date for which index return data is available.
The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the total
return lines of the indices do not.
[pie chart]
ASSET ALLOCATION (as of November 30, 1996)
Percent of Fund Investments
U.S. Stocks 44.7%
Foreign Stocks 18.0%
U.S. Bonds 25.7%
Foreign Bonds 6.2%
Money Market Securities 5.4%
See page 52 for the fund's neutral asset mix.
Annual Report Strategic Allocation: Moderate 15
STRATEGIC ALLOCATION: MODERATE
Management Q & A
An interview with Jeff Tyler, vice president and lead portfolio manager of
American Century Strategic Allocation: Moderate.
How did the fund perform?
From its inception date on February 15, 1996, through November 30, 1996, the
fund's Investor Class shares posted a total return of 9.91%, compared with the
14.26% average return of the 282 "Balanced Funds" tracked by Lipper Analytical
Services. (See the table on the previous page for other fund performance
comparisons.)
Why did the fund underperform its peer group average?
The fund had a higher-than-normal percentage of its assets in cash during the
first couple months of its existence, and that restrained returns initially. In
general, the fund holds more cash than its peers--most balanced funds are
typically 60% stocks/40% bonds; the fund's neutral position is 60% stocks/30%
bonds/10% cash. The fund also held a number of small-cap and mid-cap stocks,
which didn't fare as well as the overall stock market during the period.
Has the fund's asset mix changed much since its inception?
We've made a few adjustments. For the first few months of its existence, the
fund's portfolio was roughly neutral. In late summer, though, we began to cut
back a little on the fund's U.S. stock holdings to pursue relatively attractive
values in foreign stocks. By the end of the period, we lowered the fund's cash
position to add further to its foreign investments.
Given the fund's operating ranges, do you plan to continue the fund's current
asset mix going forward?
For the most part. We currently see more value overseas than we do
domestically, so we'll probably maintain the fund's neutral weightings in stocks
and bonds but emphasize foreign investments within these asset categories.
You mentioned, both here and in the fund's semiannual report six months ago,
that you were cutting back on U.S. stocks. But now you've taken a more neutral
position. Why the reversal?
Six months ago, the S&P 500 had gained more than 50% in a year and a half,
and we simply felt there were better investment values elsewhere. But conditions
remained favorable for stocks--economic growth moderated, inflation remained
low, corporate earnings growth held up and cash flows kept pouring into the
market. So, after taking some profits from the fund's U.S. stock holdings during
the summer, we gradually brought the fund's domestic stocks back up to neutral
toward the end of the period.
What's your outlook for U.S. stocks?
After the market's 75% gain over the past two years, we have some lingering
concerns about U.S. equities. Our two biggest concerns going forward are the
possibility of slowing corporate earnings growth and rising labor costs. A
slower U.S. economy will likely lead to a slowdown in the growth of corporate
profits, and the recent record lows in unemployment suggest that we could see
increased wage pressures in 1997.
16 Strategic Allocation: Moderate American Century Investments
STRATEGIC ALLOCATION: MODERATE
Despite these reservations, we do see some potential value in the domestic
stock market, especially among smaller companies. Small-cap stocks have lagged
their large-cap counterparts in recent months and are therefore relatively
attractive. The catalyst for a small-cap stock rally may be capital gains
legislation--if Congress passes a reduction in the capital gains tax rate,
small-cap stocks could benefit from increased demand for aggressive growth
shares.
But you see more opportunities among international stocks?
Absolutely. Despite good returns over the past couple of years, foreign
stocks continue to look more attractive to us from a relative value perspective.
Foreign markets should benefit from better economic conditions--while the U.S.
economy is slowing, economies in other parts of the world are just beginning to
rebound. Europe in particular should benefit from resurgent economic growth and
government deficit-reduction efforts. The one puzzling area is Japan, where the
stock market has been as inconsistent as the country's economic fortunes. We are
keeping a close eye on the Japanese economy because it has profound implications
for both foreign stock markets and the U.S. bond market.
What's the connection between the Japanese economy and the U.S. bond market?
In the U.S., economic growth and inflation have been relatively moderate and
steady over the past five years, at 2% and 3%, respectively. But the bond market
has been surprisingly volatile despite such calm economic conditions. One of the
main causes of this volatility has been the fluctuating demand for bonds from
foreign central banks, especially the Bank of Japan (BOJ).
FUND'S U.S. STOCKS (as of November 30, 1996)
Number of Companies 172
Dividend Yield 1.79%
Price/Earnings Ratio 22.7
% of Fund's % of
U.S. Stocks Fund
Top 5 U.S. Stocks
Exxon Corp. 2.4% 1.1%
SBC Communications Inc. 1.6% 0.7%
BellSouth Corp. 1.6% 0.7%
Tellabs, Inc. 1.5% 0.7%
Giant Food Inc. CI A 1.3% 0.6%
FUND'S FOREIGN STOCKS (as of November 30, 1996)
Number of Companies 145
Dividend Yield 1.62%
Price/Earnings Ratio 46.1
% of Fund's % of
Country Foreign Stocks Fund
Top 5 Foreign Stocks
Sandoz AG Switzerland 3.3% 0.6%
Sankyo Co Ltd. Japan 2.8% 0.5%
Marschollek,
Lautenschlaeger und
Partner AG Germany 2.0% 0.4%
CS Holding AG Switzerland 1.8% 0.3%
QLT Phototherapeutics, Inc. Canada 1.7% 0.3%
[pie chart]
Percent of Fund's Foreign Stocks
Europe 60.6%
Asia/Pacific 28.3%
Americas (excluding U.S.) 10.0%
South Africa 1.1%
Annual Report Strategic Allocation: Moderate 17
STRATEGIC ALLOCATION: MODERATE
In an effort to pull the Japanese economy out of recession, the BOJ lowered
interest rates and took steps to weaken the Japanese currency. To weaken the
yen, the BOJ purchased U.S. dollars and invested them in U.S. bonds. As a
result, the BOJ has become a major factor in the U.S. bond market over the past
five years. If the Japanese economy recovers more fully in 1997, demand from the
BOJ for U.S. bonds would likely decline, and this could have a significant
impact on the domestic bond market and U.S. interest rates.
What else do you see in store for the U.S. bond market?
The U.S. economy slowed during the last half of 1996 from the rapid pace it
established earlier in the year. If these moderate economic conditions persist,
we expect bonds to trade in a fairly narrow range over the next few months.
However, we're watching a couple of factors closely. As I mentioned before,
we're concerned about the potential impact of rising labor costs on inflation.
We're also keeping an eye on Congress, which will consider a balanced federal
budget and entitlement reform in the coming year. The outcome of these debates
could have an effect on bond prices in 1997.
Why are the fund's foreign bond holdings concentrated in Europe?
European bonds should benefit from the progress that many European
governments have made toward reducing their budget deficits. Unfortunately, the
good news in Europe is offset by unfavorable scenarios in other global
fixed-income markets. In Japan, bond yields are at historic lows, providing
minimal income and little potential for price appreciation.
Investment terms are defined in the Glossary on page 53.
FUND'S U.S. BONDS (as of November 30, 1996)
Number of Issues 35
Weighted Average Maturity 6.90 years
Average Duration 4.58 years
[pie chart]
Percent of Fund's U.S. Bonds
U.S. Treasury Notes 35.2%
Corporate Bonds 26.4%
Mortgage-Backed Securities 23.4%
U.S. Treasury Bonds 14.1%
U.S. Government Agency Securities 0.9%
FUND'S FOREIGN BONDS (as of November 30, 1996)
Number of Issues 5
Weighted Average Maturity 5.86 years
Average Duration 4.99 years
[pie chart]
Percent of Fund's Foreign Bonds
Europe 91.7%
Americas (excluding U.S.) 8.3%
18 Strategic Allocation: Moderate American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
AEROSPACE & DEFENSE -- 0.9%
1,800 Boeing Co. $ 178,875
1,400 Litton Industries, Inc.(1) 65,450
1,800 Lockheed Martin Corp. 163,125
3,200 Raytheon Co. 163,600
-------
571,050
-------
AUTOMOBILES & AUTO PARTS -- 1.6%
1,600 Daimler-Benz AG ORD(1) 104,499
8,400 Ford Motor Co. 275,100
15,000 Fuji Heavy Industries ORD 69,179
15,000 MBM Resources Berhad ORD 35,912
80,000 Quingling Motors Co. ORD 34,144
9,000 Sanden Corp. ORD 68,626
41,500 T & N plc ORD 131,888
5,000 Toyota Motor Corp. ORD 136,601
400 Volkswagen AG ORD 160,338
---------
1,016,287
---------
BANKING -- 4.0%
4,000 Bank of Melbourne Ltd. ORD 29,237
2,700 Bank of Nova Scotia ORD 93,738
600 Bank Rozwoju Eksportu S.A. ORD 19,484
1,900 CS Holding AG ORD(1) 202,120
1,500 Chase Manhattan Corp. 141,750
1,600 Citicorp 174,800
1,600 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 69,680
5,600 First Virginia Banks, Inc. 272,300
6,400 HSBC Holdings plc ORD 133,264
1,300 KeyCorp 68,087
5,000 Mercantile Bancorporation Inc. 264,375
700 Morgan (J.P.) & Co. Inc. 66,062
1,700 Nordlandsbanken ORD 35,319
5,200 PNC Bank Corp. 205,400
30,000 PT Bank Bira ORD 36,780
8,500 Royal Bank of Scotland Group
plc ORD 74,894
14,000 Security Bank Corp. ORD(1) 23,967
5,700 Sparbanken Sverige AB Cl A ORD 94,223
1,100 State Street Boston Corp. 74,388
2,900 Wachovia Corp. 174,000
800 Wells Fargo & Co. 227,700
---------
2,481,568
---------
Shares Value
- --------------------------------------------------------------------------------
BIOTECHNOLOGY -- 1.5%
2,700 Amgen Inc.(1) $ 164,700
2,000 Centocor, Inc.(1) 55,500
700 Christian Hansen Holding
A/S ORD 93,187
2,700 ClinTrials Inc.(1) 57,712
2,500 Genetics Institute, Inc.(1) 169,375
1,000 Interneuron Pharmaceuticals,
Inc.(1) 19,750
2,900 Martek BioSciences Corp.(1) 50,750
1,100 Parexel International Corp.(1) 56,856
10,200 QLT Phototherapeutics, Inc.
ORD(1) 196,902
1,300 Quintiles Transnational Corp.(1) 78,975
-------
943,707
-------
BROADCASTING & MEDIA -- 0.4%
17,000 M.A.I.D. plc ORD(1) 69,892
300 Pathe SA ORD(1) 69,979
32,000 Television Broadcasts Ltd. ORD 122,918
-------
262,789
-------
BUILDING & HOME IMPROVEMENTS -- 0.4%
5,700 Masco Corp. 208,050
1,400 Royal Plastics Group, Ltd. ORD(1) 24,899
-------
232,949
-------
BUSINESS SERVICES & SUPPLIES -- 1.9%
1,700 ABR Information Services, Inc.(1) 72,887
7,500 AccuStaff, Inc.(1) 151,875
3,100 APAC Teleservices, Inc.(1) 147,637
4,900 Concord EFS, Inc.(1) 143,631
27,500 Corporate Services Group plc ORD 77,685
3,800 Employee Solutions, Inc.(1) 70,062
6,400 First Data Corp. 255,200
100 Gartner Group, Inc. Cl A(1) 3,681
1,500 ISS International Service System
A/S CI B ORD 41,464
6,250 PMT Services, Inc.(1) 132,422
3,000 Prosegur, CIA de Seguridad
SA ORD 24,412
3,500 ROMAC International, Inc.(1) 84,000
---------
1,204,956
---------
See Notes to Financial Statements
Annual Report Strategic Allocation: Moderate 19
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
CHEMICALS & RESINS -- 1.8%
2,400 Air Products & Chemicals, Inc.$ 166,800
700 Akzo Nobel ORD 92,839
1,600 Dow Chemical Co. 134,000
1,500 Great Lakes Chemical Corp. 80,437
60 Henkel KGaA ORD(1) 2,926
10,000 Japan Synthetic Rubber Co. ORD 66,588
7,700 Lubrizol Corp. 236,775
15,100 Millennium Chemicals Inc.(1) 311,437
1,700 Nalco Chemical Co. 64,813
---------
1,156,615
---------
COMMUNICATIONS EQUIPMENT -- 2.8%
4,000 ADC Telecommunications, Inc.(1) 146,000
3,900 Ascend Communications, Inc.(1) 277,631
3,900 Comverse Technology, Inc.(1) 132,600
3,000 Davox Corp.(1) 114,375
4,091 Lucent Technologies, Inc. 209,664
3,800 Motorola, Inc. 210,425
2,050 NICE-Systems Ltd. ADR(1) 36,900
1,900 PairGain Technologies, Inc.(1) 121,125
2,400 Tandberg AS ORD(1) 64,989
10,600 Tellabs, Inc.(1) 423,338
---------
1,737,047
---------
COMMUNICATIONS SERVICES -- 3.8%
8,600 AT&T Corp. 337,550
5,300 Asia Satellite Telecommunications
Holdings Ltd. ADR(1) 134,488
11,000 BellSouth Corp. 444,125
17,000 Cable & Wireless plc ORD 136,067
3,400 Cincinnati Bell, Inc. 202,725
5,600 LCI International, Inc.(1) 182,700
4,500 MCI Communications Corp. 137,531
3,000 Omnipoint Corp.(1) 79,500
1,400 Portugal Telecom, S.A. ADR 37,100
8,600 SBC Communications Inc. 452,575
20,000 Telecom Italia Mobile SpA ORD 47,051
600 Telefonica de Espana ADR 39,600
4,800 Telefonica de Espana ORD 105,145
4,900 TELUS Corp. ORD 77,524
---------
2,413,681
---------
Shares Value
- --------------------------------------------------------------------------------
COMPUTER PERIPHERALS -- 1.5%
3,600 Azlan Group plc ORD $ 35,866
4,500 Cascade Communications(1) 310,219
2,050 Ciprico Inc.(1) 27,675
4,000 Cisco Systems Inc.(1) 271,750
3,400 Diebold, Inc. 202,725
2,000 Security Dynamics Technologies,
Inc.(1) 82,625
-------
930,860
-------
COMPUTER SOFTWARE & SERVICES -- 4.0%
2,300 CBT Group PLC ADR(1) 132,250
1,800 Cap Gemini N.V. ORD 52,981
4,100 Cap Gemini Sogeti SA ORD(1) 194,490
3,000 Clarify, Inc.(1) 134,250
3,250 Computer Associates International,
Inc. 213,688
2,800 Compuware Corp.(1) 158,900
15,000 Dimension Data Holdings Ltd. ORD 42,114
2,300 HBO & Co. 130,956
5,000 JBA Holdings Plc ORD 39,936
3,700 McAfee Associates, Inc.(1) 175,750
600 Microsoft Corp.(1) 94,162
8,300 Misys plc ORD 138,448
4,550 Oracle Systems Corp.(1) 223,519
1,100 Ordina Beheer N.V. ORD(1) 50,988
18,000 Parity plc ORD 106,691
4,800 Rational Software Corp.(1) 167,400
800 TT Tieto OY ORD 61,655
3,000 Tecnomatix Technologies Ltd.
ADR(1) 64,875
2,500 The Sage Group plc ORD 21,754
2,300 Transaction Systems Architects,
Inc.(1) 84,525
6,700 Vanstar Corp.(1) 182,575
525 WM-Data AB ORD 43,939
---------
2,515,846
---------
COMPUTER SYSTEMS -- 0.6%
900 Dell Computer Corp.(1) 91,519
600 International Business Machines
Corp. 95,625
3,200 Sun Microsystems, Inc.(1) 186,200
-------
373,344
-------
See Notes to Financial Statements
20 Strategic Allocation: Moderate American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS -- 1.3%
3,800 Avon Products, Inc. $ 211,850
1,400 Colgate-Palmolive Co. 129,675
2,000 Gillette Company 147,500
50,000 Li & Fung Ltd. ORD 46,560
3,700 Rexall Sundown, Inc.(1) 94,350
170 SMH Swiss Corporation for
Microelectronics and
Watchmaking Industries
Ltd. ORD 108,572
15,000 Shanghai Industrial Holdings Ltd.
ORD (Acquired 9-19-96,
Cost $30,272)(1)(4) 48,791
2,000 Uni-Charm Corporation ORD 48,316
-------
835,614
-------
DIVERSIFIED COMPANIES -- 1.6%
12,013 BBA Group plc ORD 70,296
4,500 Bidvest Group Ltd. ORD 23,659
19,000 Citic Pacific Ltd. ORD 99,030
29,300 Email Ltd. ORD 83,948
1,800 General Electric Co. (U.S.) 187,200
8,500 Granada Group plc ORD 123,561
80,000 Guangzhou Investments Company
Ltd. ORD 31,040
1,300 Hexagon AB CI B ORD 31,750
3,000 Nikon Corp. ORD 36,632
9,652 Siebe plc ORD 154,102
34,100 Southcorp Holdings Ltd. ORD 112,133
3,000 Yamaha Corp. ORD 51,917
---------
1,005,268
---------
ELECTRICAL & ELECTRONIC
COMPONENTS -- 1.3%
5,600 AMP, Inc. 214,200
1,000 Advantest Corp. ORD 42,693
12,600 Anicom, Inc.(1) 120,487
4,000 Elektrim Spolka Akcyjna S.A. ORD 36,510
6,000 Hana Microelectronics Public Co.
ORD 32,179
1,200 Intel Corp. 152,175
2,300 RadiSys Corp.(1) 104,938
4,000 Sharp Corp. ORD 62,547
1,200 Sony Corp. ORD 76,848
-------
842,577
-------
Shares Value
- --------------------------------------------------------------------------------
ENERGY (PRODUCTION
& MARKETING) -- 4.9%
3,500 Amoco Corp. $ 271,687
600 Atlantic Richfield Co. 83,475
8,700 British-Borneo Petroleum
Syndicate plc ORD 93,333
1,200 Burlington Resources Inc. 63,600
22,200 Cairn Energy plc ORD(1) 131,772
29,100 Canadian 88 Energy
Corp. ORD(1) 129,386
3,600 Chevron Corp. 241,200
7,200 Exxon Corp. 681,300
8,000 MAPCO Inc. 270,000
500 Mobil Corp. 60,500
2,700 Murphy Oil Corp. 137,700
4,000 Renaissance Energy Ltd. ORD(1) 140,353
2,400 Rigel Energy Corp. ORD(1) 26,322
27,000 Santos Ltd. ORD 109,883
3,400 Seagull Energy Corp.(1) 77,775
3,300 Talisman Energy, Inc. ORD(1) 111,268
1,100 Texaco Inc. 109,038
4,800 Unocal Corp. 195,600
6,400 YPF Sociedad Anonima ADR 148,800
---------
3,082,992
---------
ENERGY (SERVICES) -- 0.5%
1,700 Baker Hughes Inc. 62,262
3,600 Bouygues Offshore S.A. ADR(1) 42,300
6,000 Electricity Generating Public
Company Ltd. ORD 18,555
19,400 Saipem S.p.A. ORD 89,742
3,100 Smedvig ASA Cl A ORD 65,129
775 Smedvig ASA Cl B ORD(1) 15,438
-------
293,426
-------
ENVIRONMENTAL SERVICES -- 1.1%
11,500 Browning-Ferris Industries, Inc. 309,062
4,500 Thermatrix Inc.(1) 42,469
4,000 Tomra Systems A/S ORD 59,138
3,400 USA Waste Services, Inc.(1) 109,650
2,000 United Waste Systems, Inc.(1) 67,250
1,900 WMX Technologies, Inc. 68,400
-------
655,969
-------
See Notes to Financial Statements
Annual Report Strategic Allocation: Moderate 21
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 1.5%
5,300 Amresco, Inc.(1) $114,612
5,000 Arab Malaysian Corporation
Berhad ORD 25,722
27,000 Banca Fideuram ORD 66,102
4,100 Close Brothers Group Plc ORD 22,303
6,300 Federal National Mortgage
Association 259,875
4,535 Kempen & Company NV ORD 90,653
2,040 Newcourt Credit Group Inc. ORD
(Acquired 2-15-96 through
7-15-96, Cost $45,006)(4) 74,226
4,766 Travelers Group, Inc. 214,470
25,000 United Merchant Group ORD 44,519
-------
912,482
-------
FOOD & BEVERAGE -- 1.5%
1,500 Anheuser-Busch Companies, Inc. 63,562
12,150 Archer-Daniels-Midland 267,300
63 Cadbury Schweppes plc ORD 542
800 Delhaize-Le Lion, S.A. ORD 46,940
3,800 Hudson Foods, Inc. Cl A 69,350
1,200 Huhtamaki Group ORD 51,666
2 Lindt & Spruengli AG ORD 39,255
4,900 Northland Cranberries, Inc. 110,250
8,600 Ralcorp Holdings, Inc.(1) 168,775
3,800 Universal Foods Corp. 140,600
-------
958,240
-------
GLASS PRODUCTS -- 0.1%
2,000 Hoya Corp. ORD 75,021
-------
HEALTHCARE -- 1.2%
3,200 Bausch & Lomb, Inc. 118,800
5,600 Baxter International, Inc. 238,000
10,400 Capstone Pharmacy Services,
Inc.(1) 111,800
2,400 Health Management Associates,
Inc.(1) 53,100
2,900 NCS HealthCare, Inc. Cl A(1) 79,750
3,600 OccuSystems, Inc.(1) 104,850
3,000 Tenet Healthcare Corp.(1) 67,125
-------
773,425
-------
INDUSTRIAL EQUIPMENT
& MACHINERY -- 1.2%
2,300 Assa Abloy AB Cl B ORD 37,677
1,100 Caterpillar Inc. 87,037
7,200 Cooper Industries, Inc. 298,800
Shares Value
- --------------------------------------------------------------------------------
2,000 IHC Caland N.V. ORD $ 111,942
1,800 KCI Konecranes ORD (Acquired
3-19-96 through 7-18-96,
Cost $36,734)(1)(4) 55,412
3,400 Pfeiffer Vacuum Technology
AG ADR (1) 57,800
4,200 Powerscreen International Plc ORD 42,233
1,000 Sidel, SA ORD 63,669
-------
754,570
-------
INSURANCE -- 3.0%
3,900 Allstate Corp. 234,975
1,400 American International Group, Inc.161,000
2,215 Assurantieconcern Stad Rotterdam
ORD 87,270
2,500 CNA Financial Corp.(1) 268,750
3,800 Chubb Corp. (The) 206,150
400 General Re Corp. 67,500
2,500 Metropolitan Life Ltd. ORD 41,463
2,800 NAC Re Corp. 102,200
33,000 Reinsurance Australia Corporation
Ltd. ORD 118,186
6,000 SAFECO Corp. 250,500
800 Sampo Insurance Company
Ltd. CI A ORD 58,211
4,200 St. Paul Companies, Inc. 247,275
900 UNUM Corp. 64,013
---------
1,907,493
---------
LEISURE -- 0.9%
50,586 CDL Hotels International Limited
ORD 26,006
4,100 HFS, Inc.(1) 265,475
12,000 Ladbroke Group plc ORD 41,365
7,000 London Clubs International plc
ORD 38,960
3,000 Servgro International Ltd. ORD 15,516
5,350 Studio Plus Hotels, Inc.(1) 92,288
4,500 Suburban Lodges of America, Inc.(1)76,781
-------
556,391
-------
MACHINERY & EQUIPMENT -- 0.2%
6,800 Intevac, Inc.(1) 105,400
-------
MEDICAL EQUIPMENT & SUPPLIES -- 1.0%
2,200 Biocompatibles International plc
ORD(1) 27,319
166 Biocompatibles International plc
Warrants ORD (Expiration
date 2-14-97)(1) 374
See Notes to Financial Statements
22 Strategic Allocation: Moderate American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
4,100 Boston Scientific Corp.(1) $ 239,338
5,800 Getinge Industrier AB Cl B ORD 111,855
2,600 Laser Industries, Ltd. ADR(1) 33,638
5,000 Neuromedical Systems, Inc.(1) 67,188
12,000 Terumo ORD 158,124
-------
637,836
-------
METALS & MINING -- 0.2%
1,900 Reynolds Metals Co. 113,050
-------
PACKAGING & CONTAINERS -- 0.6%
11,100 Ball Corporation 271,950
380 SCHMALBACH LUBECA AG
ORD(1) 83,635
-------
355,585
-------
PAPER & FOREST PRODUCTS -- 1.2%
7,000 Chesapeake Corp. 213,500
1,100 Kimberly-Clark de Mexico,
SA de CV Cl A ORD 21,352
5,000 Kokuyo Co. Ltd. ORD 130,452
4,100 Union Camp Corp. 201,413
7,200 Westvaco Corp. 203,400
-------
770,117
-------
PERSONAL SERVICES -- 0.8%
5,600 Equity Corporation
International(1) 117,600
200 Falck A/S ORD 53,928
7,600 Service Corp. International 228,950
2,000 Stewart Enterprises, Inc. 68,000
-------
468,478
-------
PHARMACEUTICALS -- 2.8%
2,400 Abbott Laboratories 133,800
1,200 American Home Products Corp. 77,100
5,400 Dura Pharmaceuticals, Inc.(1) 201,150
1,600 Johnson & Johnson 85,000
5,650 Jones Medical Industries, Inc. 227,412
2,100 Lilly (Eli) & Co. 160,650
1,200 Merck & Co., Inc. 99,600
4,000 Nippon Kayaku Co. Ltd. ORD 27,197
10,400 OY Tamro AB ORD (Acquired
5-22-96 through 8-1-96,
Cost $64,047)(4) 74,330
322 Sandoz AG ORD 374,757
12,000 Sankyo Co Ltd. ORD 321,518
---------
1,782,514
---------
Shares Value
- --------------------------------------------------------------------------------
PUBLISHING -- 1.2%
7,000 American Greetings Corp. Cl A $198,187
2,700 Banta Corp. 64,462
2,300 Central Newspapers, Inc. Cl A 100,050
2,000 Dorling Kindersley Holdings
plc ORD 17,958
2,400 McClatchy Newspapers, Inc. 74,100
8,100 Mondadori (Arnoldo) Editore
SpA ORD 68,017
4,000 Quebecor Printing, Inc. ORD 72,919
6,000 VNU Tijdschriftengroep
Nederland ORD 122,371
-------
718,064
-------
RAILROADS -- 0.5%
6,600 CSX Corp. 308,550
-------
REAL ESTATE -- 0.2%
24,000 Henderson China ORD 60,217
20,000 Parkway Holdings Ltd. ORD 75,579
-------
135,796
-------
RESTAURANTS -- 0.2%
12,000 Kentucky Fried Chicken Berhad
ORD 53,186
4,000 PizzaExpress plc ORD 35,480
2,050 Rainforest Cafe, Inc.(1) 59,450
-------
148,116
-------
RETAIL (FOOD & DRUG) -- 0.8%
3,200 Albertson's, Inc. 111,600
10,900 Giant Food Inc. Cl A 367,875
-------
479,475
-------
RETAIL (GENERAL MERCHANDISE)-- 1.2%
40,000 Davids Ltd. ORD 54,697
1,700 Dayton Hudson Corp. 66,087
5,000 Dickson Concepts International
Ltd. ORD 18,365
11,400 Dillard Department Stores,
Inc. Cl A 349,125
2,200 May Department Stores Co. 107,250
2,600 Penney (J.C.) Company, Inc. 139,750
5,000 Siam Makro PLC ORD 21,726
-------
757,000
-------
See Notes to Financial Statements
Annual Report Strategic Allocation: Moderate 23
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
RETAIL (SPECIALTY) -- 1.9%
4,000 Corporate Express, Inc.(1) $ 112,250
2,500 Cortefiel, S.A. ORD 76,167
5,700 Esselte AB Cl B ORD 130,723
3,600 Fastenal Co. 155,025
114,000 First Sign International Holdings
Ltd. ORD 37,966
2,800 Home Depot, Inc. 145,950
39,000 MFI Furniture Group plc ORD 126,567
3,600 PETsMART, Inc.(1) 92,700
6,700 U.S. Office Products Company(1) 207,700
4,200 WILMAR INDUSTRIES, INC.(1) 96,075
---------
1,181,123
---------
TOBACCO -- 0.5%
2,800 Philip Morris Companies Inc. 288,750
-------
TRANSPORTATION -- 0.2%
1,500 Koninklijke Van Ommeren N.V.
ORD 65,183
6,700 Stagecoach Holdings plc ORD 71,314
-------
136,497
-------
UTILITIES (ELECTRIC) -- 2.4%
9,300 Florida Progress Corp. 301,087
8,400 Kansas City Power & Light Co. 237,300
5,700 Northern States Power Co. (Minn.) 268,613
10,400 Potomac Electric Power 270,400
3,300 Texas Utilities Electric Co. 130,350
7,700 Union Electric Co. 306,075
---------
1,513,825
---------
MISCELLANEOUS -- 0.5%
4,500 Apollo Group Inc. Cl A(1) 117,281
627 Havas Advertising SA ORD 69,531
5,300 Internatio-Muller NV ORD 132,354
-------
319,166
-------
TOTAL COMMON STOCKS
& WARRANTS-- 61.7% 38,713,509
(Cost $35,544,862) ----------
Shares/Principal Ammount Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS
CHEMICALS & RESINS -- 0.2%
2,640 Henkel KGaA ORD $ 131,485
-------
INSURANCE -- 0.4%
1,640 Marschollek, Lautenschlaeger und
Partner AG ORD 228,192
-------
LEISURE -- 0%
8,167 Village Roadshow Ltd. Cl A ORD 23,599
-------
PHARMACEUTICALS -- 0.3%
890 Fresenius Ag ORD 179,910
-------
RETAIL (SPECIALTY) -- 0.1%
900 Moebel Walther AG ORD 57,932
-------
TOTAL PREFERRED STOCKS-- 1.0% 621,118
(Cost $519,427) -------
U.S. TREASURY SECURITIES
$3,000,000 U.S. Treasury Notes, 5.00%,
2-15-99 2,962,500
625,000 U.S. Treasury Notes, 6.625%,
7-31-01 645,119
1,825,000 U.S. Treasury Notes, 7.50%,
5-15-02 1,965,872
100,000 U.S. Treasury Notes, 5.75%,
8-15-03 99,000
2,075,000 U.S. Treasury Bonds, 7.25%,
5-15-16 2,266,294
---------
TOTAL U.S. TREASURY SECURITIES -- 12.7% 7,938,785
(Cost $7,683,356) ---------
U.S. GOVERNMENT AGENCY SECURITIES -- 0.2%
150,000 FNMA, 7.60%, 1-10-97 150,330
(Cost $152,950) -------
See Notes to Financial Statements
24 Strategic Allocation: Moderate American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES(3)
$126,410 FHLMC Gold Pool #C00465,
8.00%, 6-1-26 $ 130,273
471,190 FHLMC Gold Pool #D72306,
8.00%, 6-1-26 485,590
196,492 FHLMC Gold Pool #D72431,
8.00%, 6-1-26 202,497
384,249 FHLMC Gold Pool #D72499,
8.00%, 7-1-26 395,991
248,087 FNMA Pool #341078, 7.00%,
5-1-26 246,579
398,720 FNMA Pool #250576, 7.00%,
6-1-26 396,296
543,567 GNMA Pool #397233, 9.50%,
2-20-25 584,644
461,808 GNMA Pool #001991, 9.00%,
4-20-25 485,896
296,744 GNMA Pool #416856, 7.50%,
10-15-25 301,441
191,351 GNMA Pool #421254, 7.50%,
11-15-25 194,380
345,232 GNMA Pool #416761, 7.50%,
6-15-26 350,687
---------
TOTAL MORTGAGE-BACKED
SECURITIES-- 6.0% 3,774,274
(Cost $3,685,595) ---------
CORPORATE BONDS
400,000 Aetna Inc., 6.75%, 8-15-01 409,000
100,000 Alcan Aluminium Ltd., 5.875%,
4-1-00 99,375
400,000 Citicorp, 7.125%, 5-15-06 413,500
150,000 Domtar, Inc., 8.75%, 8-1-06 160,500
150,000 Federated Department Stores,
8.50%, 6-15-03 158,625
400,000 Ford Motor Credit Co., 6.125%,
1-9-06 385,500
400,000 Lockheed Martin Corp., 6.85%,
5-15-01 410,000
Principal Amount Value
- --------------------------------------------------------------------------------
$100,000 MBNA Corp., 6.875%, 6-1-05 $ 100,875
200,000 Merrill Lynch & Co., Inc., 8.00%,
2-1-02 215,000
250,000 Oryx Energy Co., 8.375%,
7-15-04 262,813
400,000 Pacific Gas & Electric Company,
6.25%, 3-1-04 397,000
100,000 Paramount Communications, Inc.,
7.50%, 1-15-02 101,250
125,000 RJR Nabisco Holdings Corp.,
8.75%, 4-15-04 128,594
400,000 Santander Financial Issuances
Ltd., 7.00%, 4-1-06 408,500
150,000 Spieker Properties, Inc., 6.80%,
12-15-01 150,750
100,000 Tele-Communications Inc., 8.25%,
1-15-03 101,750
100,000 Time Warner Inc., 8.11%, 8-15-06 105,500
250,000 360 Communications Co.,
7.125%, 3-1-03 251,250
---------
TOTAL CORPORATE BONDS-- 6.8% 4,259,782
(Cost $4,092,471) ---------
SOVEREIGN GOVERNMENTS & AGENCIES
CAD 400,000 Government of Canada, 7.25%,
6-1-03 323,717
FRF 2,500,000 Government of France, 8.50%,
4-25-03 567,336
JPY100,000,000 Republic of Italy, 3.50%,
6-20-01 949,291
DEM 2,000,000 Treuhandanstalt, 7.375%,
12-2-02 1,449,675
GBP 350,000 United Kingdom Treasury,
8.00%, 6-10-03 614,641
--------
TOTAL SOVEREIGN GOVERNMENTS
& AGENCIES-- 6.2% 3,904,660
(Cost $3,800,260) ---------
See Notes to Financial Statements
Annual Report Strategic Allocation: Moderate 25
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: MODERATE
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER(2)
$500,000 General Electric Capital, 5.25%,
1-16-97 $ 496,614
500,000 IMI Funding Corp. (USA), 5.24%,
2-18-97 494,100
600,000 Kingdom of Sweden, 5.25%,
2-3-97 594,222
500,000 Merrill Lynch & Co., Inc., 5.25%,
1-29-97 495,641
700,000 Mitsubishi International, 5.25%,
1-9-97 695,867
---------
TOTAL COMMERCIAL PAPER-- 4.4% 2,776,444
(Cost $2,776,620) ---------
TEMPORARY CASH INVESTMENTS -- 1.0%
Repurchase Agreement, Goldman Sachs &
Co., Inc., (collateralized by U.S. Treasury
obligations), in a joint trading account at
5.61%, dated 11-29-96, due 12-2-96
(Delivery value $600,281) 600,000
(Cost $600,000) -------
TOTAL INVESTMENT SECURITIES -- 100.0% $62,738,902
(Cost $58,855,541) ===========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain
246,637 CHF 12-31-96 $ 189,617 $ 2,080
988,294 DEM 12-30-96 643,693 5,475
1,312,552 FRF 12-31-96 251,386 2,736
39,992,925 JPY 12-30-96 352,868 4,123
354,175 NLG 12-31-96 205,629 1,812
------- -----
$1,643,193 $16,226
========== =======
(Value on Settlement Date $1,659,419)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CAD = Canadian Dollar
CHF = Swiss Franc
DEM = German Mark
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GNMA = Government National Mortgage Association
JPY = Japanese Yen
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
(1) Non-income producing
(2) Rates disclosed represent effective yield to maturity as of November 30,
1996.
(3) Final maturity indicated. Expected remaining average life used for purposes
of calculating the weighted average portfolio maturity.
(4) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at November 30, 1996, was $252,759, which represented
0.4% of the net assets of Strategic Allocation:
Moderate.
See Notes to Financial Statements
26 Strategic Allocation: Moderate American Century Investments
STRATEGIC ALLOCATION: AGGRESSIVE
CUMULATIVE TOTAL RETURNS (as of November 30, 1996)(1)
MONTHS LIFE OF FUND
INVESTOR CLASS(2) (inception 2/15/96)
Strategic Allocation: Aggressive ............... 5.74% 10.60%
S&P 500(3) ..................................... 14.41% 18.17%
Lehman Aggregate Bond Index(3) ................. 7.31% 5.75%(5)
Three-Month U.S. Treasury Bill(3) .............. 2.55% 3.82%(5)
Average Growth & Income Fund(4) ................ 11.41% 20.74%
ADVISOR CLASS(2) (inception 10/2/96)
Strategic Allocation: Aggressive ............... -- 2.98%
S&P 500(3) ..................................... -- 9.08%
Lehman Aggregate Bond Index(3) ................. -- 3.97%
Three-Month U.S. Treasury Bill(3) .............. -- 0.83%
(1) Returns are defined in the Glossary on page 53.
(2) See page 51 for share class descriptions.
(3) See page 52 for more information about these comparative indices.
(4) According to Lipper Analytical Services. See page 52 for more information
on Lipper and the fund's category.
(5) Returns since 2/29/96, the date closest to the fund's inception date for
which index return data is available.
<TABLE>
[line graph]
GROWTH OF $10,000 OVER THE LIFE OF THE FUND
S&P 500 Lehman Aggregate 3-Month T-Bill Strategic: Aggressive
<S> <C> <C> <C> <C>
2/29/96 $10000 $10000 $10000 $10000
3/31/96 10133 9930 10041 110101
4/30/96 10269 9875 10082 110423
5/31/96 10504 9855 10125 10544
6/30/96 10586 9987 10167 110524
7/31/96 10102 10014 10211 110081
8/31/96 10292 9997 10254 110323
9/30/96 10911 10172 10297 110766
10/31/96 11197 10397 10339 110847
11/30/96 12018 10575 10382 111149
</TABLE>
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Data quoted is for Investor Class only; performance for other
classes will vary due to differences in fee structures (see the Cumulative Total
Returns table above). The chart begins on 2/29/96 because it is the date closest
to the fund's 2/15/96 inception date for which index return data is available.
The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the total
return lines of the indices do not.
[pie chart]
ASSET ALLOCATION (as of November 30, 1996)
Percent of Fund Investments
U.S. Stocks 51.3%
Foreign Stocks 21.8%
U.S. Bonds 14.0%
Foreign Bonds 5.3%
Money Market Securities 7.6%
See page 52 for the fund's neutral asset mix.
Annual Report Strategic Allocation: Aggressive 27
Management Q & A
An interview with Jeff Tyler, vice president and lead portfolio manager of
American Century Strategic Allocation: Aggressive.
How did the fund perform?
From its inception date on February 15, 1996, through November 30, 1996, the
fund's Investor Class shares posted a total return of 10.60%, compared with the
20.74% average return of the 542 "Growth & Income Funds" tracked by Lipper
Analytical Services. (See the table on the previous page for other fund
performance comparisons.)
Why did the fund underperform its peer group average?
I would hesitate to call this group the fund's "peers." Almost all of the
funds in this group invest exclusively in U.S. stocks, whereas the fund
typically devotes 20% of its portfolio to foreign stocks and another 25% to
bonds and cash. With U.S. stocks producing the strongest returns of any asset
class during the period, it's not surprising that the fund lagged its "peers."
This more diversified positioning puts the fund at a comparative disadvantage
when U.S. stocks are performing well, but the fund should outperform when
domestic stocks lag.
Another factor working against the fund was the strong performance of
large-cap U.S. stocks during the period. Growth & income funds get their income
from stocks that pay high dividends, and these stocks tend to be larger
companies. The fund's U.S. stock holdings lean more toward small-cap stocks,
which severely underperformed large-cap issues during the last few months of the
period (see the Period Overview on page 3 for an explanation of the divergence
between the performance of large- and small-cap stocks).
Has the fund's asset mix changed much since its inception?
We've made a few adjustments. For the first few months of its existence, the
fund's portfolio was roughly neutral. Toward the end of the period, though, we
began to cut back a little on the fund's U.S. stocks to pursue relatively
attractive values in foreign stocks.
Given the fund's operating ranges, do you plan to continue the fund's current
asset mix going forward?
For the most part. We currently see more value overseas than we do
domestically, so we'll probably return to neutral weightings in stocks and bonds
but emphasize foreign investments within these categories.
You mentioned, both here and in the fund's semiannual report six months ago,
that you were cutting back on U.S. stocks. But now you're planning a more
neutral position. Why the reversal?
Six months ago, the S&P 500 had gained more than 50% in a year and a half,
and we simply felt there were better investment values elsewhere. But conditions
remained favorable for stocks--economic growth moderated, inflation remained
low, corporate earnings growth held up and cash flows kept pouring into the
market. We think U.S. stocks could continue to do well if these conditions
persist. In addition, we see a great deal of value in small-cap stocks, which
haven't fully participated in this year's stock rally. We've recently expanded
the fund's small-cap holdings.
28 Strategic Allocation: Aggressive American Century Investments
STRATEGIC ALLOCATION: AGGRESSIVE
Do you have any lingering skepticism about the outlook for U.S. stocks?
After the market's 75% gain over the past two years, we have some concerns
about U.S. equities. Our two biggest concerns going forward are the possibility
of slowing corporate earnings growth and rising labor costs. A slower U.S.
economy will likely lead to a slowdown in the growth of corporate profits, and
the recent record lows in unemployment suggest that we could see increased wage
pressures in 1997.
You don't have the same reservations about foreign stocks?
Not at all. Foreign markets should benefit from better economic
conditions--while the U.S. economy is slowing, economies in other parts of the
world are just beginning to rebound. Europe in particular should benefit from
resurgent economic growth and government deficit-reduction efforts. The one
puzzling area is Japan, where the stock market has been as inconsistent as the
country's economic fortunes. We are keeping a close eye on the Japanese economy
because it has profound implications for both foreign stock markets and the U.S.
bond market.
FUND'S U.S. STOCKS (as of November 30, 1996)
Number of Companies 184
Dividend Yield 1.49%
Price/Earnings Ratio 24.8
% of Fund's % of
U.S. Stocks Fund
Top 5 U.S. Stocks
Tellabs, Inc. 1.8% 0.9%
Exxon Corp. 1.7% 0.9%
SBC Communications Inc. 1.5% 0.8%
BellSouth Corp. 1.4% 0.7%
Cisco Systems Inc. 1.3% 0.7%
FUND'S FOREIGN STOCKS (as of November 30, 1996)
Number of Companies 174
Dividend Yield 1.65%
Price/Earnings Ratio 42.2
% of Fund's % of
Country Foreign Stocks Fund
Top 5 Foreign Stocks
Sandoz AG Switzerland 2.3% 0.5%
Fresenius AG Germany 1.6% 0.4%
Cable & Wireless plc U.K. 1.5% 0.3%
Talisman Energy, Inc. Canada 1.5% 0.3%
Sankyo Co. Ltd. Japan 1.4% 0.3%
[pie chart]
Percent of Fund's Foreign Stocks
Europe 56.2%
Asia/Pacific 31.0%
Americas (excluding U.S.) 11.9%
South Africa 0.9%
Annual Report Strategic Allocation: Aggressive 29
STRATEGIC ALLOCATION: AGGRESSIVE
What's the connection between the Japanese economy and the U.S. bond market?
In the U.S., economic growth and inflation have been relatively moderate and
steady over the past five years, at 2% and 3%, respectively. But the bond market
has been surprisingly volatile despite such calm economic conditions. One of the
main causes of this volatility has been the fluctuating demand for bonds from
foreign central banks, especially the Bank of Japan (BOJ).
In an effort to pull the Japanese economy out of recession, the BOJ lowered
interest rates and took steps to weaken the Japanese currency. To weaken the
yen, the BOJ purchased U.S. dollars and invested them in U.S. bonds. As a
result, the BOJ has become a major factor in the U.S. bond market over the past
five years. If the Japanese economy recovers more fully in 1997, demand from the
BOJ for U.S. bonds would likely decline, and this could have a significant
impact on the domestic bond market and U.S. interest rates.
What else do you see in store for the U.S. bond market?
The U.S. economy slowed during the last half of 1996 from the rapid pace it
established earlier in the year. If these moderate economic conditions persist,
we expect bonds to trade in a fairly narrow range over the next few months.
However, we're watching a couple of factors closely. As I mentioned before,
we're concerned about the potential impact of rising labor costs on inflation.
We're also keeping an eye on Congress, which will consider a balanced federal
budget and entitlement reform in the coming year. The outcome of these debates
could have an effect on bond prices in 1997.
Why are the fund's foreign bond holdings concentrated in Europe?
European bonds should benefit from the progress that many European
governments have made toward reducing their budget deficits. Unfortunately, the
good news in Europe is offset by unfavorable scenarios in other global
fixed-income markets. In Japan, bond yields are at historic lows, providing
minimal income and little potential for price appreciation.
Investment terms are defined in the Glossary on page 53.
FUND'S U.S. BONDS (as of November 30, 1996)
Number of Issues 26
Weighted Average Maturity 6.30 years
Average Duration 4.60 years
[pie chart]
Percent of Fund's U.S. Bonds
U.S. Treasury Notes 40.5%
Corporate Bonds 38.3%
Mortgage-Backed Securities 16.6%
U.S. Treasury Bonds 3.2%
U.S. Government Agency Securities 1.4%
FUND'S FOREIGN BONDS (as of November 30, 1996)
Number of Issues 10
Weighted Average Maturity 5.86 years
Average Duration 4.99 years
[pie chart]
Percent of Fund's Foreign Bonds
Europe 65.9%
Americas (excluding U.S.) 34.1%
30 Strategic Allocation: Aggressive American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS & WARRANTS
AEROSPACE & DEFENSE -- 1.1%
2,700 Boeing Co. $268,312
1,000 Litton Industries, Inc.(1) 46,750
1,200 Lockheed Martin Corp. 108,750
6,000 Mitsubishi Heavy Industries Ltd.
ORD 49,018
2,200 Raytheon Co. 112,475
-------
585,305
-------
AUTOMOBILES & AUTO PARTS -- 1.6%
100 Bayerische Motoren Werke (BMW)
ORD 64,824
2,400 Daimler-Benz AG ORD(1) 156,749
5,600 Ford Motor Co. 183,400
7,000 Fuji Heavy Industries ORD 32,284
6,000 Kwik-Fit Holdings plc ORD 22,599
12,000 MBM Resources Berhad ORD 28,730
60,000 Quingling Motors Co. ORD 25,608
3,000 Sanden Corp. ORD 22,875
30,400 T & N plc ORD 96,612
2,000 Toyota Motor Corp. ORD 54,640
400 Volkswagen AG ORD 160,338
-------
848,659
-------
BANKING -- 4.3%
4,000 Bank of Melbourne Ltd. ORD 29,237
2,700 Bank of Nova Scotia ORD 93,738
400 Bank Rozwoju Eksportu S.A. ORD 12,989
1,600 Banque Nationale de Paris ORD 63,631
1,200 CS Holding AG ORD(1) 127,655
1,700 Chase Manhattan Corp. 160,650
1,900 Citicorp 207,575
1,500 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 65,325
3,800 First Virginia Banks, Inc. 184,775
4,841 HSBC Holdings plc ORD 100,802
900 KeyCorp 47,137
3,600 Mercantile Bancorporation Inc. 190,350
500 Morgan (J.P.) & Co. Inc. 47,187
1,600 Nordlandsbanken ORD 33,242
3,500 PNC Bank Corp. 138,250
20,000 PT Bank Bira ORD 24,520
6,500 Royal Bank of Scotland Group
plc ORD 57,272
13,440 Security Bank Corp. ORD(1) 23,008
Shares Value
- --------------------------------------------------------------------------------
12,600 Siam Commercial Bank ORD $ 109,501
3,500 Sparbanken Sverige AB Cl A ORD 57,856
1,100 State Street Boston Corp. 74,387
1,900 Wachovia Corp. 114,000
1,000 Wells Fargo & Co. 284,625
---------
2,247,712
---------
BIOTECHNOLOGY -- 2.2%
3,900 Amgen Inc.(1) 237,900
4,200 Centocor, Inc.(1) 116,550
500 Christian Hansen Holding
A/S CI B ORD 66,562
2,400 ClinTrials Inc.(1) 51,300
3,400 Genetics Institute, Inc.(1) 230,350
5,500 Interneuron Pharmaceuticals,
Inc.(1) 108,625
2,100 Martek BioSciences Corp.(1) 36,750
2,700 Parexel International Corp.(1) 139,556
3,700 QLT Phototherapeutics, Inc. ORD(1) 71,425
1,800 QUINTILES TRANSNATIONAL CORP.(1) 109,350
-------
1,168,368
---------
BROADCASTING & MEDIA -- 0.4%
1,700 Central European Media
Enterprises Ltd. ADR(1) 47,600
1,600 Grupo Televisa GDR(1) 43,600
13,000 M.A.I.D. plc ORD(1) 53,446
100 Pathe SA ORD(1) 23,326
16,000 Television Broadcasts Ltd. ORD 61,459
-------
229,431
-------
BUILDING & HOME IMPROVEMENTS -- 0.3%
3,800 Masco Corp. 138,700
1,300 Royal Plastics Group, Ltd. ORD(1) 23,121
-------
161,821
-------
BUSINESS SERVICES & SUPPLIES -- 2.9%
1,300 ABR Information Services, Inc.(1) 55,737
6,000 AccuStaff, Inc.(1) 121,500
350 Adecco SA ORD 90,163
3,000 APAC Teleservices, Inc.(1) 142,875
200 BIS SA ORD 20,152
3,000 Canon Copyer Sales ORD 31,361
4,450 Concord EFS, Inc.(1) 130,441
29,000 Corporate Services Group plc ORD 81,923
3,300 Employee Solutions, Inc.(1) 60,844
8,800 First Data Corp. 350,900
2,400 Gartner Group, Inc. Cl A(1) 88,350
See Notes to Financial Statements
Annual Report Strategic Allocation: Aggressive 31
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
2,000 ISS International Service System
A/S CI B ORD $ 55,285
7,250 PMT Services, Inc.(1) 153,609
3,000 Prosegur, CIA de Seguridad
SA ORD 24,412
3,500 ROMAC International, Inc.(1) 84,000
--------
1,491,552
---------
CHEMICALS & RESINS -- 1.7%
1,600 Air Products & Chemicals, Inc. 111,200
1,100 Akzo Nobel ORD 145,889
1,100 Dow Chemical Co. 92,125
900 Great Lakes Chemical Corp. 48,262
82 Henkel KGaA ORD(1) 3,999
14,000 Japan Synthetic Rubber Co. ORD 93,223
5,200 Lubrizol Corp. 159,900
9,000 Millennium Chemicals Inc.(1) 185,625
1,100 Nalco Chemical Co. 41,937
-------
882,160
-------
COMMUNICATIONS EQUIPMENT -- 3.6%
3,600 ADC Telecommunications, Inc.(1) 131,400
4,500 Ascend Communications, Inc.(1) 320,344
3,900 Comverse Technology, Inc.(1) 132,600
10,000 Datacraft Asia Ltd. 14,000
4,400 Davox Corp.(1) 167,750
4,000 Lucent Technologies, Inc. 205,000
2,500 Motorola, Inc. 138,437
1,700 NICE-Systems Ltd. ADR(1) 30,600
1,800 PairGain Technologies, Inc.(1) 114,750
1,700 Premisys Communications, Inc.(1) 87,444
2,000 Tandberg AS ORD(1) 54,158
12,200 Tellabs, Inc.(1) 487,238
---------
1,883,721
---------
COMMUNICATIONS SERVICES -- 4.1%
5,400 AT&T Corp. 211,950
2,300 Asia Satellite Telecommunications
Holdings Ltd. ADR(1) 58,363
9,000 BellSouth Corp. 363,375
21,700 Cable & Wireless plc ORD 173,686
3,400 Cincinnati Bell, Inc. 202,725
3,900 LCI International, Inc.(1) 127,238
3,000 MCI Communications Corp. 91,687
3,500 Omnipoint Corp.(1) 92,750
2,600 Portugal Telecom, S.A. ADR 68,900
Shares Value
- --------------------------------------------------------------------------------
7,800 SBC Communications Inc. $ 410,475
2,240 Telefonica de Espana ADR 147,840
7,700 TELUS Corp. ORD 121,824
3,000 Worldcom Inc.(1) 69,563
---------
2,140,376
---------
COMPUTER PERIPHERALS -- 2.1%
2,000 Azlan Group plc ORD 19,926
4,900 Cascade Communications(1) 337,794
1,650 Ciprico Inc.(1) 22,275
5,200 Cisco Systems Inc.(1) 353,275
3,300 Diebold, Inc. 196,762
1,200 FORE Systems, Inc.(1) 47,325
2,600 Security Dynamics Technologies,
Inc.(1) 107,413
---------
1,084,770
---------
COMPUTER SOFTWARE & SERVICES -- 5.4%
3,100 CBT Group PLC ADR(1) 178,250
1,500 Cap Gemini N.V. ORD 44,151
2,300 Cap Gemini Sogeti SA ORD(1) 109,104
2,400 Clarify, Inc.(1) 107,400
4,850 Computer Associates International,
Inc. 318,887
1,400 ComputerLand Poland S.A. ORD(1) 27,278
2,000 Compuware Corp.(1) 113,500
15,000 Dimension Data Holdings Ltd. ORD 42,114
3,500 Frontec AB CI B ORD(1) 63,589
4,700 HBO & Co. 267,606
4,900 JBA Holdings Plc ORD 39,137
4,500 McAfee Associates, Inc.(1) 213,750
3,100 Merkantildata A/S ORD 57,893
400 Microsoft Corp.(1) 62,775
7,000 Misys plc ORD 116,763
4,600 Oracle Systems Corp.(1) 225,975
1,100 Ordina Beheer N.V. ORD(1) 50,988
9,000 Parity plc ORD 53,346
5,100 Rational Software Corp.(1) 177,862
700 TT Tieto OY ORD 53,948
3,000 Tecnomatix Technologies Ltd.
ADR(1) 64,875
2,700 The Sage Group plc ORD 23,495
3,700 Transaction Systems Architects,
Inc.(1) 135,975
9,300 Vanstar Corp.(1) 253,425
320 WM-Data AB Cl B ORD 26,782
---------
2,828,868
---------
See Notes to Financial Statements
32 Strategic Allocation: Aggressive American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS -- 0.9%
1,000 Dell Computer Corp.(1) $ 101,687
1,400 Gateway 2000, Inc.(1) 75,250
500 International Business Machines
Corp. 79,687
3,000 LCI Computer Group N.V. ORD(1) 27,203
2,800 Sun Microsystems, Inc.(1) 162,925
-------
446,752
-------
CONSUMER PRODUCTS -- 2.3%
5,300 Avon Products, Inc. 295,475
5,000 Canon, Inc. ORD 105,416
1,800 Colgate-Palmolive Co. 166,725
2,200 Gillette Company 162,250
42,000 Li & Fung Ltd. ORD 39,110
4,000 Mattel, Inc. 123,500
3,700 Rexall Sundown, Inc.(1) 94,350
170 SMH Swiss Corporation for
Microelectronics and
Watchmaking Industries
Ltd. ORD 108,572
13,000 Shanghai Industrial Holdings
Ltd. ORD (Acquired 9-19-96,
Cost $26,236)(1)(4) 42,285
2,000 Uni-Charm Corporation ORD 48,316
---------
1,185,999
---------
DIVERSIFIED COMPANIES -- 1.9%
13,209 BBA Group plc ORD 77,294
16,000 Citic Pacific Ltd. ORD 83,394
31,500 Email Ltd. ORD 90,251
2,200 General Electric Co. (U.S.) 228,800
5,900 Granada Group plc ORD 85,766
50,000 Guangzhou Investment Company
Ltd. ORD 19,400
2,200 Hexagon AB CI B ORD 53,731
9,000 Nikon Corp. ORD 109,896
9,529 Siebe plc ORD 152,139
21,900 Southcorp Holdings Ltd. ORD 72,015
1,000 Yamaha Corp. ORD 17,306
-------
989,992
-------
ELECTRICAL & ELECTRONIC
COMPONENTS -- 2.2%
3,200 AMP, Inc. 122,400
2,000 Advantest Corp. ORD 85,387
14,700 Anicom, Inc.(1) 140,569
Shares Value
- --------------------------------------------------------------------------------
6,000 Elec & Eltek International
Company Ltd. $ 20,760
3,000 Elektrim Spolka Akcyjna S.A. ORD 27,383
1,000 Fujimi Inc. ORD 52,532
8,000 Hana Microelectronics Public
Co. ORD 42,905
1,200 Intel Corp. 152,175
1,000 Noritsu Koki Company Ltd. ORD 53,147
1,700 RadiSys Corp.(1) 77,562
8,000 Sharp Corp. ORD 125,093
2,000 Sony Corp. ORD 128,080
2,000 Texas Instruments, Inc. 127,500
---------
1,155,493
---------
ENERGY (PRODUCTION
& MARKETING) -- 4.6%
2,300 Amoco Corp. 178,537
500 Atlantic Richfield Co. 69,562
5,600 British-Borneo Petroleum
Syndicate plc ORD 60,077
800 Burlington Resources Inc. 42,400
11,200 Cairn Energy plc ORD(1) 66,480
14,200 Canadian 88 Energy Corp. ORD(1) 63,137
2,900 Chevron Corp. 194,300
4,800 Exxon Corp. 454,200
5,400 MAPCO Inc. 182,250
1,000 Mobil Corp. 121,000
1,800 Murphy Oil Corp. 91,800
2,600 Renaissance Energy Ltd. ORD(1) 91,230
8,100 Rigel Energy Corp. ORD(1) 88,836
8,600 Santos Ltd. ORD 35,000
1,900 Seagull Energy Corp.(1) 43,462
4,900 Talisman Energy, Inc. ORD(1) 165,215
10,100 Tarragon Oil & Gas Ltd. ORD(1) 108,900
1,400 Texaco Inc. 138,775
3,300 Unocal Corp. 134,475
3,500 YPF Sociedad Anonima ADR 81,375
---------
2,411,011
---------
ENERGY (SERVICES) -- 0.5%
1,200 Baker Hughes Inc. 43,950
3,600 Bouygues Offshore S.A. ADR(1) 42,300
13,200 Saipem S.p.A. ORD 61,062
4,000 Smedvig ASA Cl A ORD 84,038
1,000 Smedvig ASA Cl B ORD(1) 19,920
-------
251,270
-------
See Notes to Financial Statements
Annual Report Strategic Allocation: Aggressive 33
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES -- 1.0%
7,700 Browning-Ferris Industries, Inc.$ 206,937
4,900 Thermatrix Inc.(1) 46,244
1,600 Tomra Systems A/S ORD 23,655
3,100 USA Waste Services, Inc.(1) 99,975
2,400 United Waste Systems, Inc.(1) 80,700
1,300 WMX Technologies, Inc. 46,800
-------
504,311
-------
FINANCIAL SERVICES -- 2.3%
2,300 Acom Company Ltd. ORD 101,023
6,600 Amresco, Inc.(1) 142,725
3,000 Arab Malaysian Corporation
Berhad ORD 15,433
8,000 Banca Fideuram ORD 19,586
7,000 Close Brothers Group Plc ORD 38,078
5,500 Federal National Mortgage
Association 226,875
3,339 Kempen & Company NV ORD 66,745
2,600 Newcourt Credit Group Inc. ORD
(Acquired 2-15-96 through
8-15-96, Cost $55,743)(4) 94,602
17,000 Peregrine Investment Holdings
Ltd. ORD 31,441
2,900 Promise Company Ltd. ORD 145,210
500 Takefuji Corp. ORD(1) 37,335
5,800 Travelers Group, Inc. 261,000
25,000 United Merchant Group ORD 44,519
---------
1,224,572
---------
FOOD & BEVERAGE -- 1.6%
4,600 Anheuser-Busch Companies, Inc. 194,925
8,255 Archer-Daniels-Midland 181,610
42 Cadbury Schweppes plc ORD 361
2,500 Hudson Foods, Inc. Cl A 45,625
900 Huhtamaki Group ORD 38,750
1 Lindt & Spruengli AG ORD 19,627
6,700 Northland Cranberries, Inc. 150,750
5,800 Ralcorp Holdings, Inc.(1) 113,825
2,500 Universal Foods Corp. 92,500
-------
837,973
-------
GLASS PRODUCTS -- 0.3%
4,000 Hoya Corp. ORD 150,042
-------
Shares Value
- --------------------------------------------------------------------------------
HEALTHCARE -- 1.6%
1,900 Bausch & Lomb, Inc. $ 70,537
3,700 Baxter International, Inc. 157,250
13,000 Capstone Pharmacy Services,
Inc.(1) 139,750
4,300 Health Management
Associates, Inc.(1) 95,137
4,200 NCS HealthCare, Inc. Cl A(1) 115,500
3,900 OccuSystems, Inc.(1) 113,587
5,600 Tenet Healthcare Corp.(1) 125,300
-------
817,061
-------
INDUSTRIAL EQUIPMENT
& MACHINERY -- 1.4%
4,000 Assa Abloy AB Cl B ORD 65,525
2,100 Caterpillar Inc. 166,162
4,800 Cooper Industries, Inc. 199,200
1,300 IHC Caland N.V. ORD 72,762
1,000 KCI Konecranes ORD (Acquired
3-19-96, Cost $14,750)(1)(4) 30,784
1,975 Larsen & Toubro Ltd. GDR
(Acquired 2-15-96 through
8-28-96, Cost $32,228)(1)(4) 28,638
3,400 Pfeiffer Vacuum Technology
AG ADR(1) 57,800
5,000 Powerscreen International Plc ORD 50,277
500 Sidel, SA ORD 31,835
180,000 Southeast Asia Cement Holdings,
Inc.(1) 19,174
-------
722,157
-------
INSURANCE -- 3.0%
5,000 Allstate Corp. 301,250
1,700 American International Group, Inc.195,500
100 Argonaut Group, Inc. 2,962
1,913 Assurantieconcern Stad Rotterdam
ORD 75,372
1,700 CNA Financial Corp.(1) 182,750
2,500 Chubb Corp. (The) 135,625
300 General Re Corp. 50,625
1,800 Metropolitan Life Ltd. ORD 29,854
2,000 NAC Re Corp. 73,000
22,000 Reinsurance Australia Corporation
Ltd. ORD 78,790
3,900 SAFECO Corp. 162,825
800 Sampo Insurance Company
Ltd. ORD 58,211
2,800 St. Paul Companies, Inc. 164,850
700 UNUM Corp. 49,788
---------
1,561,402
---------
See Notes to Financial Statements
34 Strategic Allocation: Aggressive American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
Leisure -- 1.2%
90,000 CDL Hotels International Limited
ORD $ 46,269
40,000 Caspian plc ORD(1) 20,682
14,000 Crown Ltd. ORD(1) 32,135
3,700 HFS, Inc.(1) 239,575
26,500 Ladbroke Group plc ORD 91,347
5,500 London Clubs International plc
ORD 30,612
2,100 Servgro International Ltd. ORD 10,862
5,250 Studio Plus Hotels, Inc.(1) 90,563
5,400 Suburban Lodges of
America, Inc.(1) 92,138
-------
654,183
-------
MACHINERY & EQUIPMENT -- 0.2%
5,400 Intevac, Inc.(1) 83,700
-------
MEDICAL EQUIPMENT & SUPPLIES -- 1.2%
3,333 Biocompatibles International plc
ORD(1) 41,389
333 Biocompatibles International plc
Warrants ORD (Expiration date
2-14-97)(1) 750
5,500 Boston Scientific Corp.(1) 321,062
5,035 Getinge Industrier AB Cl B ORD 97,102
3,300 Laser Industries, Ltd. ADR(1) 42,694
4,600 Neuromedical Systems, Inc.(1) 61,812
4,000 Terumo ORD 52,708
-------
617,517
-------
METALS & MINING -- 0.1%
1,100 Reynolds Metals Co. 65,450
------
PACKAGING & CONTAINERS -- 0.5%
7,500 Ball Corporation 183,750
270 SCHMALBACH LUBECA AG
ORD(1) 59,425
-------
243,175
-------
PAPER & FOREST PRODUCTS -- 0.9%
4,700 Chesapeake Corp. 143,350
1,200 Kimberly-Clark de Mexico,
SA de CV Cl A ORD 23,293
2,000 Kokuyo Co. Ltd. ORD 52,181
2,800 Union Camp Corp. 137,550
4,800 Westvaco Corp. 135,600
-------
491,974
-------
Shares Value
- --------------------------------------------------------------------------------
PERSONAL SERVICES -- 1.1%
5,600 Equity Corporation
International(1) $117,600
100 Falck A/S ORD 26,964
9,000 Service Corp. International 271,125
4,700 Stewart Enterprises, Inc. 159,800
-------
575,489
-------
PHARMACEUTICALS -- 3.3%
2,700 Abbott Laboratories 150,525
2,500 American Home Products Corp. 160,625
4,000 Dura Pharmaceuticals, Inc.(1) 149,000
3,300 Johnson & Johnson 175,312
4,350 Jones Medical Industries, Inc. 175,087
2,500 Lilly (Eli) & Co. 191,250
2,000 Merck & Co., Inc. 166,000
4,000 Nippon Kayaku Co. Ltd. ORD 27,197
13,000 OY Tamro AB ORD (Acquired
6-12-96, Cost $75,015)(4) 92,913
223 Sandoz AG ORD 259,537
6,000 Sankyo Co Ltd. ORD 160,759
---------
1,708,205
---------
PUBLISHING -- 1.0%
4,700 American Greetings Corp. Cl A 133,069
2,000 Banta Corp. 47,750
1,600 Central Newspapers, Inc. Cl A 69,600
3,000 Dorling Kindersley Holdings plc
ORD 26,938
1,500 McClatchy Newspapers, Inc. 46,312
7,700 Mondadori (Arnoldo) Editore SpA
ORD 64,658
3,100 Quebecor Printing, Inc. ORD 56,512
4,300 VNU Tijdschriftengroep Nederland
ORD 87,699
-------
532,538
-------
RAILROADS -- 0.4%
4,400 CSX Corp. 205,700
-------
REAL ESTATE -- 0.4%
30,000 Henderson China ORD 75,272
1,400 IVG Holding AG ORD 56,429
17,000 Parkway Holdings Ltd. ORD 64,242
-------
195,943
-------
RESTAURANTS -- 0.3%
3,500 PizzaExpress plc ORD 31,045
4,100 Rainforest Cafe, Inc.(1) 118,900
-------
149,945
-------
See Notes to Financial Statements
Annual Report Strategic Allocation: Aggressive 35
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Shares Value
- --------------------------------------------------------------------------------
RETAIL (APPAREL) -- 0.1%
1,650 Pacific Sunwear of California(1)$ 44,344
-------
RETAIL (FOOD & DRUG) -- 0.7%
2,000 Albertson's, Inc. 69,750
7,300 Giant Food Inc. Cl A 246,375
1,000 Matsumotokiyoshi ORD 33,909
-------
350,034
-------
RETAIL (GENERAL MERCHANDISE) -- 1.3%
800 Ceteco Holding NV ORD 45,101
43,000 Davids Ltd. ORD 58,800
1,200 Dayton Hudson Corp. 46,650
12,000 Dickson Concepts International
Ltd. ORD 44,077
7,600 Dillard Department Stores,
Inc. Cl A 232,750
1,400 Kohl's Corp.(1) 55,825
1,400 May Department Stores Co. 68,250
17,000 PT Matahari Putra Prima ORD 19,211
1,700 Penney (J.C.) Company, Inc. 91,375
4,500 Siam Makro PLC ORD 19,554
-------
681,593
-------
RETAIL (SPECIALTY) -- 2.3%
783 Ahrend Groep NV ORD 40,377
4,000 Corporate Express, Inc.(1) 112,250
5,800 Esselte AB Cl B ORD 133,017
4,100 Fastenal Co. 176,556
170,000 First Sign International
Holdings Ltd. ORD 56,615
2,700 Home Depot, Inc. 140,737
34,700 MFI Furniture Group plc ORD 112,612
3,500 PETsMART, Inc.(1) 90,125
6,100 U.S. Office Products Co.(1) 189,100
5,000 Wilmar Industries, Inc.(1) 114,375
300 WOLFORD AG ORD 35,562
---------
1,201,326
---------
TOBACCO -- 0.8%
3,200 Imasco, Ltd. ORD 79,203
3,200 Philip Morris Companies Inc. 330,000
-------
409,203
-------
Shares Value
- --------------------------------------------------------------------------------
TRANSPORTATION -- 0.3%
700 Koninklijke Van Ommeren N.V.
ORD $ 30,419
10,000 Safmarine and Rennies Holdings
Ltd. ORD 23,523
8,000 Stagecoach Holdings plc ORD 85,151
-------
139,093
-------
UTILITIES (ELECTRIC) -- 1.9%
6,300 Florida Progress Corp. 203,962
5,600 Kansas City Power & Light Co. 158,200
3,800 Northern States Power Co. (Minn.) 179,075
7,000 Potomac Electric Power 182,000
2,300 Texas Utilities Electric Co. 90,850
5,100 Union Electric Co. 202,725
---------
1,016,812
---------
MISCELLANEOUS -- 0.6%
4,400 Apollo Group Inc. Cl A(1) 114,675
784 Havas Advertising SA ORD 86,942
3,000 Internatio-Muller NV ORD 74,917
10,000 Metacorp Bhd ORD 30,867
-------
307,401
-------
TOTAL COMMON STOCKS
& WARRANTS-- 71.9% 37,484,403
(Cost $34,736,415) ----------
PREFERRED STOCKS
CHEMICALS & RESINS -- 0.2%
2,038 Henkel KGaA ORD 101,502
-------
COMMUNICATIONS SERVICES -- 0.2%
1,540 Telecomunicacoes Brasileiras
SA ADR 116,655
-------
INSURANCE -- 0.2%
929 Marschollek, Lautenschlaeger und
Partner AG ORD 129,263
-------
LEISURE -- 0.1%
19,441 Village Roadshow Ltd. Cl A ORD 56,175
------
PHARMACEUTICALS -- 0.4%
920 Fresenius Ag ORD 185,974
-------
Retail (Specialty) -- 0.1%
800 Moebel Walther AG ORD 51,495
-------
TOTAL PREFERRED STOCKS-- 1.2% 641,064
(Cost $566,626) -------
See Notes to Financial Statements
36 Strategic Allocation: Aggressive American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
$ 675,000 U.S. Treasury Notes, 6.375%,
3-31-01 $ 689,553
190,000 U.S. Treasury Notes, 6.625%,
7-31-01 196,116
1,825,000 U.S. Treasury Notes, 7.50%,
5-15-02 1,965,872
100,000 U.S. Treasury Notes, 5.75%,
8-15-03 99,000
225,000 U.S. Treasury Bonds, 6.75%,
8-15-26 234,844
---------
TOTAL U.S. TREASURY SECURITIES -- 6.1% 3,185,385
(Cost $3,128,373) ---------
U.S. GOVERNMENT AGENCY SECURITIES -- 0.2%
100,000 FNMA, 7.60%, 1-10-97 100,220
(Cost $101,969) --------
MORTGAGE-BACKED SECURITIES(3)
99,680 FNMA Pool #250576, 7.00%,
6-1-26 99,074
216,613 GNMA Pool #397233, 9.50%,
2-20-25 232,983
148,372 GNMA Pool #416856, 7.50%,
10-15-25 150,721
157,697 GNMA Pool #372335, 7.50%,
4-15-26 160,189
150,879 GNMA Pool #402682, 7.50%,
6-15-26 153,263
396,122 GNMA Pool #002271, 8.50%,
8-20-26 412,188
-------
TOTAL MORTGAGE-BACKED
SECURITIES-- 2.3% 1,208,418
(Cost $1,185,896) ---------
Principal Amount Value
- --------------------------------------------------------------------------------
CORPORATE BONDS
$ 100,000 Aetna Inc., 6.75%, 8-15-01 $ 102,250
350,000 Anixter International Inc.,
8.00%, 9-15-03 364,438
300,000 Citicorp, 7.125%, 5-15-06 310,125
200,000 Federated Department Stores,
8.50%, 6-15-03 211,500
100,000 GMAC, 8.50%, 2-4-02 109,500
CZK 7,000,000 International Bank Recon. &
Develop., 11.75%, 8-26-97 260,097
$ 400,000 MBNA Corp., 6.875%, 6-1-05 403,500
125,000 Oryx Energy Co., 8.375%,
7-15-04 131,406
100,000 Pacific Gas & Electric Company,
6.25%, 3-1-04 99,250
100,000 Santander Financial Issuances
Ltd., 7.00%, 4-1-06 102,125
150,000 Spieker Properties, Inc., 6.80%,
12-15-01 150,750
100,000 Tele-Communications Inc.,
8.25%, 1-15-03 101,750
125,000 Time Warner Inc., 8.11%,
8-15-06 131,875
150,000 United Air Lines, 9.00%,
12-15-03 166,688
150,000 360 COMMUNICATIONS CO.,
7.125%, 3-1-03 150,750
---------
TOTAL CORPORATE BONDS-- 5.4% 2,796,004
---------
(Cost $2,720,714)
SOVEREIGN GOVERNMENTS & AGENCIES
CAD 250,000 Government of Canada, 7.25%,
6-1-03 202,323
FRF 1,500,000 Government of France, 8.50%,
4-25-03 340,401
$ 100,000 Quebec Province, 8.80%,
4-15-03 112,375
227,500 Republic of Brazil, VRN,
6.6875%, 1-2-97 resets
semi-annually off the
6-month LIBOR plus
.8125% with no caps, final
maturity 1-1-01 219,680
See Notes to Financial Statements
Annual Report Strategic Allocation: Aggressive 37
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Principal Amount Value
- --------------------------------------------------------------------------------
JPY 50,000,000 Republic of Italy, 3.50%,
6-20-01 $ 474,645
DEM 1,000,000 Treuhandanstalt, 7.375%,
12-2-02 724,837
GBP 150,000 United Kingdom Treasury,
8.00%, 6-10-03 263,417
$ 250,000 United Mexican States, 6.25%,
12-31-19 184,688
250,000 United Mexican States, VRN,
6.375%, 5-2-97, resets
semi-annually off the
6-month LIBOR plus
.8125% with no caps,
final maturity 12-31-19 212,188
-------
TOTAL SOVEREIGN
GOVERNMENTS & AGENCIES-- 5.3% 2,734,554
(Cost $2,665,718) ---------
COMMERCIAL PAPER(2)
800,000 American Family Financial Services,
5.24%, 2-13-97 791,136
650,000 Caisse d'Amortissment de la Dette
Sociale, 5.17%, 12-4-96 649,714
500,000 General Re Corp., 5.17%,
12-16-96 498,858
500,000 IMI Funding Corp. (USA), 5.25%,
1-10-97 497,034
100,000 IMI Funding Corp. (USA), 5.24%,
2-18-97 98,820
150,000 Kingdom of Sweden, 5.25%,
2-3-97 148,556
---------
TOTAL COMMERCIAL PAPER-- 5.1% 2,684,118
(Cost $2,684,273) ---------
Principal Amount Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 2.5%
Repurchase Agreement, Goldman Sachs & Co.,
Inc., (collateralized by U.S. Treasury
obligations), in a joint trading
account at 5.61%, dated 11-29-96,
due 12-2-96
(Delivery value $1,300,608) $ 1,300,000
(Cost $1,300,000) ------------
TOTAL INVESTMENT SECURITIES -- 100.0% $52,134,166
(Cost $49,089,984) ============
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain
- --------------------------------------------------------
209,454 CHF 12-31-96 $ 161,031 $ 1,766
691,792 DEM 12-30-96 450,576 3,833
947,070 FRF 12-31-96 181,387 2,018
29,531,887 JPY 12-30-96 260,567 3,044
323,393 NLG 12-31-96 187,757 1,655
---------- -------
$1,241,318 $12,316
========== =======
(Value on Settlement Date $1,253,634)
See Notes to Financial Statements
38 Strategic Allocation: Aggressive American Century Investments
SCHEDULE OF INVESTMENTS
STRATEGIC ALLOCATION: AGGRESSIVE
NOVEMBER 30, 1996
Notes to Schedule of Investments
ADR = American Depositary Receipt
CAD = Canadian Dollar
CHF = Swiss Franc
CZK = Czech Koruna
DEM = German Mark
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GDR = Global Depositary Receipt
GNMA = Government National Mortgage Association
JPY = Japanese Yen
LIBOR = London Interbank Offered Rate
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
resets = The frequency with which a fixed-income security's coupon changes,
based on current market conditions or an underlying index. The more
frequently a security resets, the less risk the investor is taking that the
coupon will vary significantly from current market rates.
VRN = Variable Rate Note, rates shown are effective November 30, 1996. Interest
reset date is indicated and used in calculating the weighted average
portfolio maturity.
(1) Non-income producing
(2) Rates disclosed represent effective yield to maturity as of November 30,
1996.
(3) Final maturity indicated. Expected remaining average life used for purposes
of calculating the weighted average portfolio maturity.
(4) Security was purchased under Rule 144A of the Securities Act of 1933 and,
unless registered under the Act or exempted from registration, may only be
sold to qualified institutional investors. The aggregate value of
restricted securities at November 30, 1996, was $289,222, which represented
0.6% of the net assets of Strategic Allocation:
Aggressive.
See Notes to Financial Statements
Annual Report Strategic Allocation: Aggressive 39
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
STRATEGIC STRATEGIC STRATEGIC
ALLOCATION: ALLOCATION: ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
<S> <C> <C> <C>
ASSETS
Investment securities, at value (identified cost of
$35,334,180, $58,855,541 and $49,089,984, respectively) (Note 3) ............ $36,719,052 $62,738,902 $ 52,134,166
Foreign currency holdings, at value (identified cost of $0, $69,557
and $3,655, respectively) ................................................... -- 69,552 3,650
Cash .......................................................................... 99,429 402,635 1,079,877
Receivable for forward foreign currency exchange contracts .................... 7,197 16,226 12,316
Receivable for investments sold ............................................... 98,452 1,944,755 349,769
Receivable for capital shares sold ............................................ 252,063 431 19,956
Dividends and interest receivable ............................................. 290,869 421,067 248,641
------- ------- -------
37,467,062 65,593,568 53,848,375
---------- ---------- ----------
LIABILITIES
Disbursements in excess of demand deposit cash ................................ 15,136 14,289 26,246
Payable for investments purchased ............................................. 322,657 87,812 1,621,057
Payable for capital shares redeemed ........................................... 16,567 24,839 4,310
Accrued management fees (Note 2) .............................................. 28,237 61,365 46,492
Distribution fees payable (Note 2) ............................................ 744 1,444 1,095
Service fees payable (Note 2) ................................................. 744 1,444 1,095
Other liabilities ............................................................. 30 53 40
-- -- --
384,115 191,246 1,700,335
------- ------- ---------
Net assets .................................................................... $37,082,947 $65,402,322 $ 52,148,040
=========== =========== ============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ....................................... $35,424,921 $61,230,165 $ 49,094,512
Undistributed net investment income ........................................... 192,595 266,895 301,109
Accumulated undistributed net realized gain (loss)
from investment and foreign currency transactions ............................. 73,373 5,069 (304,969)
Net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies (Note 3) .................... 1,392,058 3,900,193 3,057,388
--------- --------- ---------
$37,082,947 $65,402,322 $ 52,148,040
=========== =========== ============
INVESTOR CLASS
Net assets .................................................................... $33,110,174 $57,836,404 $ 46,276,485
Shares outstanding ............................................................ 6,296,444 10,676,105 8,362,777
Net asset value per share ..................................................... $ 5.26 $ 5.42 $ 5.53
ADVISOR CLASS
Net assets .................................................................... $ 3,972,773 $ 7,565,918 $ 5,871,555
Shares outstanding ............................................................ 755,654 1,397,023 1,061,359
Net asset value per share ..................................................... $ 5.26 $ 5.42 $ 5.53
</TABLE>
See Notes to Financial Statements
40 Statements of Assets and Liabilities American Century Investments
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FEBRUARY 15, 1996 (INCEPTION) THROUGH NOVEMBER 30, 1996
STRATEGIC STRATEGIC STRATEGIC
ALLOCATION: ALLOCATION: ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
INVESTMENT INCOME
Income:
<S> <C> <C> <C>
Interest .................................................................. $ 474,042 $ 718,970 $ 341,313
Dividends (net of foreign taxes withheld of $1,369, $5,878 and
$5,546, respectively) ................................................... 88,950 256,321 193,861
------ ------- -------
562,992 975,291 535,174
------- ------- -------
Expenses:
Management fees (Note 2) .................................................. 118,774 292,871 217,333
Distribution fees - Advisor Class (Note 2) ................................ 1,525 2,887 2,193
Shareholder services fees - Advisor Class (Note 2) ........................ 1,525 2,887 2,193
Directors' fees and expenses .............................................. 1,262 1,402 1,428
----- ----- -----
123,086 300,047 223,147
------- ------- -------
Net investment income ..................................................... 439,906 675,244 312,027
------- ------- -------
Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency (Note 3)
Net realized gain (loss) on:
Investments ............................................................. 62,810 (869) (313,737)
Foreign currency transactions ........................................... (2,771) (4,968) (2,150)
------ ------ ------
60,039 (5,837) (315,887)
------ ------ --------
Change in net unrealized appreciation on:
Investments ............................................................. 1,384,872 3,883,361 3,044,182
Translation of assets and liabilities in foreign currencies ............. 7,186 16,832 13,206
1,392,058 3,900,193 3,057,388
--------- --------- ---------
Net realized and unrealized gain on
investments and foreign currency .......................................... 1,452,097 3,894,356 2,741,501
--------- --------- ---------
Net Increase in Net Assets
Resulting from Operations ................................................. $ 1,892,003 $ 4,569,600 $ 3,053,528
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
Annual Report Statements Of Operations 41
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FEBRUARY 15, 1996 (INCEPTION) THROUGH NOVEMBER 30, 1996
STRATEGIC STRATEGIC STRATEGIC
ALLOCATION: ALLOCATION: ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
Increase in Net Assets
OPERATIONS
<S> <C> <C> <C>
Net investment income ..................................................... $ 439,906 $ 675,244 $ 312,027
Net realized gain (loss) on investments
and foreign currency transactions ....................................... 60,039 (5,837) (315,887)
Change in net unrealized appreciation on investments and
translation of assets and liabilites in foreign currencies .............. 1,392,058 3,900,193 3,057,388
--------- --------- ---------
Net increase in net assets resulting from operations ...................... 1,892,003 4,569,600 3,053,528
--------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS From net investment income:
Investor Class .......................................................... (233,977) (397,443) --
-------- -------- ---------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets from
capital share transactions .............................................. 35,424,921 61,230,165 49,094,512
---------- ---------- ----------
Net increase in net assets ................................................ 37,082,947 65,402,322 52,148,040
NET ASSETS
Beginning of period ....................................................... -- -- --
----------- ---------- ----------
End of period ............................................................. $ 37,082,947 $ 65,402,322 $ 52,148,040
============ ============ ============
Undistributed net investment income ....................................... $ 192,595 $ 266,895 $ 301,109
============ ============ ============
</TABLE>
See Notes to Financial Statements
42 Statements of Changes in Net Assets American Century Investments
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--American Century Strategic Asset Allocations, Inc. (the
Corporation) is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. Three series of funds are
currently issued as Strategic Allocation: Conservative, Strategic Allocation:
Moderate and Strategic Allocation: Aggressive (the Funds). The Funds' investment
objective is to provide as high a level of total return (capital appreciation
plus dividend and interest income) as is consistent with its risk profile. The
Funds' seek to achieve this by diversifying investments among three asset
classes - equity securities, bonds and cash equivalent instruments, the mix of
which will depend on the risk profile of the particular fund. On September 3,
1996, the Funds implemented a multiple class structure whereby each Fund is
authorized to issue three classes of shares: the Investor Class, the Service
Class and the Advisor Class. The shares outstanding prior to September 3, 1996,
are designated as Investor Class shares. The three classes of shares differ
principally in their respective shareholder servicing and distribution expenses
and arrangements. All shares of each Fund represent an equal pro rata interest
in the assets of the class to which such shares belong, and have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. Sale of the Advisor Class for each
Fund commenced on October 2, 1996. Sale of the Service class for each Fund had
not commenced as of November 30, 1996. The following significant accounting
policies, related to all classes of the Funds, are in accordance with accounting
policies generally accepted in the investment company industry.
Security Valuations--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through valuations obtained
from a commercial pricing service or at the mean of the most recent bid and
asked prices. When valuations are not readily available, securities are valued
at fair value as determined in accordance with procedures adopted by the Board
of Directors.
Security Transactions--Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
Investment Income--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of discounts and premiums.
Foreign Currency Transactions--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of assets and
liabilities, other than portfolio securities, resulting from changes in the
exchange rates.
Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investments are a component of realized
gain (loss) on investments and unrealized appreciation (depreciation) on
investments, respectively.
Forward Foreign Currency Exchange Contracts--The Funds may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Funds' exposure to foreign currency exchange rate fluctuations. When
required, the Funds will segregate liquid assets in an amount sufficient to
cover their obligations under the hedge contracts. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the Funds and
the resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and Liabilities. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.
Annual Report Notes To Financial Statements 43
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
Repurchase Agreements--The Funds may enter into repurchase agreements with
institutions that the Funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Funds require that the securities purchased in a repurchase
transaction be transferred to the custodian in a manner sufficient to enable the
Funds to obtain those securities in the event of a default under the repurchase
agreement. ACIM monitors, on a daily basis, the value of the securities
transferred to ensure that the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Funds under each repurchase agreement.
Joint Trading Account--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Funds, along with other registered
investment companies having management agreements with ACIM and Benham
Management Corporation, may transfer uninvested cash balances into a joint
trading account held at the Funds' custodian. These balances are invested in one
or more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
Income Tax Status--It is the policy of the Funds to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal income taxes.
Distributions to Shareholders--Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income are declared and
paid quarterly, with the exception of Strategic Allocation: Aggressive which is
declared and paid annually. Distributions from net realized gains are declared
and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differences
in the recognition of income and expense items for financial statement and tax
purposes.
At November 30, 1996, Strategic Allocation: Aggressive had an accumulated
net realized capital loss carryover of $252,326 (expiring in 2004) that can be
used to offset future taxable gains.
Supplementary Information--Certain officers and directors of the Corporation
are also officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc., the parent of the Corporation's investment
manager, ACIM, the Corporation's distributor, American Century Investment
Services, Inc. (ACIS), and the Corporation's transfer agent, American Century
Services Corporation.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Corporation has entered into Management Agreements with ACIM that
provides each Fund with investment advisory and management services in exchange
for a single, unified management fee per class. Additional fees apply to the
Advisor Class and Service Class shares, as described in the respective
prospectuses. The Agreements provide that all expenses of the Funds, except
brokerage commissions, taxes, interest, expenses of those directors who are not
considered "interested persons" as defined in the Investment Company Act of 1940
(including counsel fees) and extraordinary expenses, will be paid by ACIM. The
fee is computed daily and paid monthly based on each class's average daily
closing net assets during the previous month. The annual management fee for each
class of the Funds is as follows:
<TABLE>
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
Investor Advisor Investor Advisor Investor Advisor
Class Class Class Class Class Class
AVERAGE NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
First $1 billion ............................. 1.00% .75% 1.10% .85% 1.20% .95%
Over $1 billion .............................. .90% .65% 1.00% .75% 1.10% .85%
</TABLE>
44 Notes To Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
The Board of Directors has adopted a shareholder services and distribution
plan for the Advisor Class, pursuant to Rule 12b-1 of the Investment Company Act
of 1940. The Advisor Class Master Distribution and Shareholder Services Plan
provides that the Funds will pay ACIM an annual distribution fee equal to .25%
and service fee equal to .25%. The fees are computed daily and paid monthly
based on the Advisor Class's average daily closing net assets during the
previous month. The distribution fee provides compensation for distribution
expenses incurred in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with ACIS and/or ACIM. The
service fee provides compensation for shareholder and administrative services
rendered by ACIM, its affiliates or independent third party providers. Fees
incurred under the Master Distribution and Shareholder Services Plan during the
period October 2, 1996 (the commencement of sale) through November 30, 1996,
were $3,050 for Strategic Allocation: Conservative, $5,774 for Strategic
Allocation: Moderate and $4,386 for Strategic Allocation: Aggressive.
- --------------------------------------------------------------------------------
3. Investment Transactions
Investment transactions (excluding short-term investments) for the period
February 15, 1996 (inception date) through November 30, 1996, were as follows:
<TABLE>
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
PURCHASES
<S> <C> <C> <C>
Common Stocks .............................................. $17,824,605 $54,452,177 $47,881,090
Preferred Stocks ........................................... 16,854 552,942 424,886
U.S. Treasury & Agency Obligations ......................... 11,965,459 14,375,929 5,192,509
Other Debt Obligations ..................................... 5,207,017 9,362,110 5,421,219
PROCEEDS FROM SALES
Common Stocks .............................................. $ 4,476,893 $18,766,121 $12,571,193
Preferred Stocks ........................................... 16,660 172,588 130,852
U.S. Treasury & Agency Obligations ......................... 768,499 2,994,743 867,258
Other Debt Obligations ..................................... 738,277 1,477,544 706,544
</TABLE>
On November 30, 1996, the composition of unrealized appreciation and
(depreciation) of investment securities based on the aggregate cost of
investments for federal income tax purposes was as follows:
<TABLE>
Appreciation (Depreciation) Net Federal Tax Cost
<S> <C> <C> <C> <C>
Strategic Allocation: Conservative .................. $1,564,690 $(230,626) $1,334,064 $35,384,988
Strategic Allocation: Moderate ...................... 4,433,341 (639,100) 3,794,241 58,944,661
Strategic Allocation: Aggressive .................... 3,663,033 (671,505) 2,991,528 49,142,638
</TABLE>
Annual Report Notes to Financial Statements 45
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
4. Expense Offset Arrangements
There are 50,000,000 shares of the Investor Class and 25,000,000 shares of
the Advisor Class authorized for issuance in each of the Funds. All shares are
$.01 par value. Transactions in shares of the Funds were as follows:
<TABLE>
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
Shares Amount Shares Amount Shares Amount
INVESTOR CLASS
February 15, 1996(1) through November 30, 1996:
<S> <C> <C> <C> <C> <C> <C>
Shares sold ........................................ 7,164,621 $ 35,925,344 16,034,505 $ 81,994,470 10,377,899 $ 53,860,559
Shares issued in reinvestment of distributions ..... 46,166 232,102 76,326 394,738 -- --
Shares redeemed .................................... (914,343) (4,590,760) (5,434,726) (28,493,182) (2,015,122) (10,487,280)
-------- ---------- ---------- ----------- ---------- -----------
Net increase ....................................... 6,296,444 $ 31,566,686 10,676,105 $ 53,896,026 8,362,777 $ 43,373,279
========= ============ ========== ============ ========= ============
ADVISOR CLASS
October 2, 1996(2) through November 30, 1996:
Shares sold ........................................ 779,853 $ 3,982,634 1,432,659 $ 7,524,438 1,076,959 $ 5,806,112
Shares redeemed .................................... (24,199) (124,399) (35,636) (190,299) (15,600) (84,879)
------- -------- ------- -------- ------- -------
Net increase ....................................... 755,654 $ 3,858,235 1,397,023 $ 7,334,139 1,061,359 $ 5,721,233
======= ============ ========= ============ ========= ============
</TABLE>
(1) Inception date of the Funds.
(2) Sale of the Advisor Class commenced on October 2, 1996.
- --------------------------------------------------------------------------------
5. Subsequent Events
The following name changes became effective January 1, 1997:
<TABLE>
NEW NAMES FORMER NAMES
<S> <C> <C>
Funds' Issuer: American Century Strategic Asset Allocations, Inc. Twentieth Century Strategic Asset Allocations, Inc.
Funds: American Century Strategic Allocation: Conservative Strategic Allocation: Conservative
American Century Strategic Allocation: Moderate Strategic Allocation: Moderate
American Century Strategic Allocation: Aggressive Strategic Allocation: Aggressive
Investment Manager: American Century Investment Management, Inc. Investors Research Corporation
Parent Company: American Century Companies, Inc. Twentieth Century Companies, Inc.
Distributor: American Century Investment Services, Inc. Twentieth Century Securities, Inc.
Transfer Agent: American Century Services Corporation Twentieth Century Services, Inc.
</TABLE>
46 Notes To Financial Statements American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
STRATEGIC ALLOCATION: CONSERVATIVE
For a Share Outstanding Throughout the Periods as Noted
1996(1) 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C>
Beginning of Period ........................................................... $5.00 $5.09
----- -----
Income from Investment Operations
Net Investment Income(3) .................................................... .13 .03
Net Realized and Unrealized Gain on Investment Transactions ................. .22 .14
--- ---
Total from Investment Operations ............................................ .35 .17
--- ---
Distributions
From Net Investment Income .................................................. (.09) -
---- -----
Net Asset Value, End of Period ................................................ $5.26 $5.26
===== =====
Total Return(4) ............................................................. 7.02% 3.34%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets(5) ........................ 1.01% 1.25%
Ratio of Net Investment Income to Average Net Assets(5) ..................... 3.67% 3.25%
Portfolio Turnover Rate ..................................................... 44% 44%
Average Commission Paid per Investment Security Traded ...................... $.0271 $.0271
Net Assets, End of Period (in thousands) .................................... $33,110 $3,973
</TABLE>
(1) February 15, 1996 (Inception date of the Fund) through November 30, 1996.
(2) October 2, 1996 (Commencement of sale of the Advisor Class) through
November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns are not annualized.
(5) Annualized
See Notes to Financial Statements
Annual Report Financial Highlights 47
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
STRATEGIC ALLOCATION: MODERATE
For a Share Outstanding Throughout the Periods as Noted
1996(1) 1996(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value,
Beginning of Period ........................................................... $5.00 $5.24
----- -----
Income from Investment Operations
Net Investment Income(3) .................................................... .10 .02
Net Realized and Unrealized Gain on Investment Transactions ................. .39 .16
--- ---
Total from Investment Operations ............................................ .49 .18
--- ---
Distributions
From Net Investment Income .................................................. (.07) -
---- -----
Net Asset Value, End of Period ................................................ $5.42 $5.42
===== =====
Total Return(4) ............................................................. 9.91% 3.44%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets(5) ........................ 1.10% 1.35%
Ratio of Net Investment Income to Average Net Assets(5) ..................... 2.52% 2.10%
Portfolio Turnover Rate ..................................................... 78% 78%
Average Commission Paid per Investment Security Traded ...................... $.0186 $.0186
Net Assets, End of Period (in thousands). ................................... $57,836 $7,566
</TABLE>
(1) February 15, 1996 (Inception date of the Fund) through November 30, 1996.
(2) October 2, 1996 (Commencement of sale of the Advisor Class) through
November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns are not annualized.
(5) Annualized
See Notes to Financial Statements
48 Financial Highlights American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
STRATEGIC ALLOCATION: AGGRESSIVE
For a Share Outstanding Throughout the Periods as Noted
1996(1) 1996(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value,
Beginning of Period ........................................................... $5.00 $5.37
----- -----
Income from Investment Operations
Net Investment Income(3) .................................................... .07 .01
Net Realized and Unrealized Gain on Investment Transactions ................. .46 .15
--- ---
Total from Investment Operations ............................................ .53 .16
--- ---
Net Asset Value, End of Period ................................................ $5.53 $5.53
===== =====
Total Return(4) ............................................................. 10.60% 2.98%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets(5) ........................ 1.20% 1.45%
Ratio of Net Investment Income to Average Net Assets(5) ..................... 1.72% 1.31%
Portfolio Turnover Rate ..................................................... 64% 64%
Average Commission Paid per Investment Security Traded ...................... $.0202 $.0202
Net Assets, End of Period (in thousands) .................................... $46,276 $5,872
</TABLE>
(1) February 15, 1996 (Inception date of the Fund) through November 30, 1996.
(2) October 2, 1996 (Commencement of sale of the Advisor Class) through
November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns are not annualized.
(5) Annualized
See Notes to Financial Statements
Annual Report Financial Highlights 49
REPORT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors
American Century Strategic Asset Allocations
We have audited the accompanying statements of assets and liabilities of
American Century Strategic Asset Allocations, Inc. (formerly Twentieth Century
Strategic Asset Allocations, Inc.) (comprised of the Strategic Allocation:
Conservative, Strategic Allocation: Moderate and Strategic Allocation:
Aggressive portfolios) (the Funds), including the schedules of investments, as
of November 30, 1996, and the related statements of operations and changes in
net assets and the financial highlights for the periods ended November 30, 1996.
These financial statements are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1996 by correspondence with the custodian. As to securities
relating to uncompleted transactions, we performed other audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Funds at November 30, 1996, and the results of their operations, changes in
their net assets and the financial highlights for the period indicated above in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
January 3, 1997
50 Report of Independent Auditors American Century Investments
SHARE CLASS AND RETIREMENT
INFORMATION
Share Classes
Until September 3, 1996, the Strategic Asset Allocation funds issued one
class of fund shares, reflecting the fact that most investors bought their
shares directly from American Century. All investors paid the same annual
unified management fee and did not pay any commissions or other fees to purchase
shares from American Century.
But increasing numbers of investors are purchasing fund shares through
financial intermediaries who expect to be compensated for the additional
services they provide. In September, American Century began to offer two classes
of shares for many of its funds, including the Strategic Asset Allocation funds.
One class is for investors who still buy directly from American Century, the
other for investors who buy through financial intermediaries.
The original class of Strategic Asset Allocation fund shares is called the
Investor Class. All shares issued and outstanding before September 3, 1996, have
been designated as Investor Class shares. Investor Class shares may also be
purchased after September 3, 1996. Investor Class shareholders do not pay any
commissions or other fees for purchase of fund shares directly from American
Century. Investors who buy Investor Class shares through a broker-dealer may be
required to pay the broker-dealer a transaction fee. The price and performance
of the Investor Class shares are listed in newspapers. No other class is
currently listed.
In addition, there is an Advisor Class, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class
investors pay an annual management fee that is 0.25% less than that paid by
Investor Class investors, but Advisor Class investors also pay a 0.50% Rule
12b-1 service and distribution fee. Half of that fee is available to pay for
recordkeeping and administrative services, and half is available to pay for
distribution services provided by the financial intermediary through which the
Advisor Class shares are purchased.
Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and conditions.
Important Notice for All IRA and 403(b) Shareholders
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount, unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/ Redemptions form or an IRS Form W-4P. Call American Century for
either form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
Annual Report Share Class And Retirement Information 51
BACKGROUND INFORMATION
Investment Philosophy & Policies
American Century offers four asset allocation funds, including the three
Strategic Asset Allocation funds. Each fund invests in a diversified portfolio
of stocks, bonds and money market securities, with the objective of achieving as
high a level of total return as is consistent with the fund's risk profile,
given its asset mix. The funds rely on a team management approach--although one
lead manager coordinates the funds' investments, groups of managers are
responsible for the active management of the individual fund components.
Strategic Allocation: Conservative seeks to provide regular income, the
potential for moderate long-term growth and a measure of principal protection.
The fund emphasizes bonds and money market securities to provide the income and
principal protection, while the prospects for long-term growth are derived from
the stock portion of the fund's portfolio.
Strategic Allocation: Moderate seeks to provide long-term growth prospects,
with regular income as a secondary consideration. The fund emphasizes common
stocks for their long-term growth prospects, but it maintains a sizable stake in
bonds and money market securities to provide some income and increase overall
price stability.
Strategic Allocation: Aggressive seeks to provide significant long-term
growth potential, accompanied by a small amount of regular income. The fund
focuses primarily on common stocks as a source of long-term growth, but it
maintains a small portion of its assets in bonds and money market securities to
help cushion the share price volatility of the stock portion.
Comparative Indices
The following comparative indices are not investment products available for
purchase.
The S&P 500 was created by Standard & Poor's Corporation and consists of
the 500 largest companies traded on the New York Stock Exchange. Although the
S&P 500 represents less than 10% of all U.S. stocks, these 500 companies make up
approximately 70% of the total market capitalization of the U.S. stock market.
As a result, the S&P 500 is considered a broad measure of the U.S. stock market.
The Lehman Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Lehman Mortgage-Backed Securities Index. It
reflects the price fluctuations of Treasury securities, U.S. government agency
securities, corporate bond issues and mortgage-backed securities.
The Morgan Stanley Europe, Australia, Far East (EAFE(R)) Index is a widely
followed group of stocks from 20 different countries.
The Salomon Brothers Non-U.S. World Government Bond Index consists of
fixed-income government bonds from 13 countries (excluding the United States).
The Three-Month Treasury Bill Index is derived from secondary market
interest rates as published by the Federal Reserve Bank.
Lipper Rankings
Lipper Analytical Services, Inc. is an independent mutual fund ranking
service that groups funds according to their investment objectives. The Lipper
categories for the Strategic Asset Allocation funds include "Income Funds"
(Conservative), "Balanced Funds" (Moderate), and "Growth & Income Funds"
(Aggressive).
THE FUNDS' NEUTRAL ASSET MIXES
CON MOD AGG
Stocks 40% 60% 75%
Bonds 45% 30% 20%
Cash (money market securities) 15% 10% 5%
PORTFOLIO MANAGEMENT TEAM
Lead Manager Jeff Tyler
U.S. Stocks Phil Davidson, Glenn Fogle,
Peter Zuger
Foreign Stocks Henrik Strabo, Ted Tyson
U.S. Bonds Casey Colton, Bud Hoops,
Jeff Houston, Dave Schroeder
Foreign Bonds Bill Martin
Money Market Securities Bob Gahagan, Amy O'Donnell
52 Background Information American Century Investments
GLOSSARY
RETURNS
Total Return figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
Cumulative Total Returns illustrate the fund's return over a stated period of
time.
STOCK PORTFOLIO STATISTICS
Dividend Yield--a percentage return calculated by dividing a company's annual
cash dividend by the current market value of the company's stock.
Price/Earnings (P/E) Ratio--a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)
BOND PORTFOLIO STATISTICS
Weighted Average Maturity--measures the average amount of time until the
securities in a bond portfolio mature, weighted by dollar amount.
Average Duration--measures the interest rate sensitivity of a bond portfolio.
Average duration, measured in years, represents the approximate percentage
change in the value of a bond portfolio if interest rates move up or down by one
percentage point (i.e., 1%). Therefore, longer portfolio durations typically
mean greater sensitivity to changes in interest rates.
FIXED-INCOME SECURITY TYPES
Corporate Bonds--debt securities or instruments issued by companies and
corporations. Short-term corporate securities are typically issued to raise cash
and cover current expenses in anticipation of future revenues; long-term
corporate securities are issued to finance capital expenditures, such as new
plant construction or equipment purchases.
Foreign Government Securities--debt securities issued or guaranteed by
foreign governments or their political subdivisions. Some of these securities
are direct obligations of the issuing government; others are backed by some form
of government sponsorship.
Mortgage-Backed Securities--debt securities that represent ownership in pools
of mortgage loans. Most mortgage-backed securities are structured as
"pass-throughs"--the monthly payments of principal and interest on the mortgages
in the pool are collected by the bank that securitized the mortgages and are
"passed through" to investors. While the payments of principal and interest are
considered secure (many are backed by government agency guarantees), the cash
flow is less certain than in other fixed-income investments. Mortgages that are
paid off early reduce future interest payments from the pool.
U. S. Government Agency Securities -- debt securities issued by U.S.
government agencies (such as the Federal Home Loan Bank and the Federal Farm
Credit Bank). Some agency securities are backed by the full faith and credit of
the U.S. government, while others are guaranteed only by the issuing agency.
Government agency securities include discount notes (maturing in one year or
less) and medium-term notes, debentures and bonds (maturing in three months to
50 years).
U. S. Treasury Securities--debt securities issued by the U.S. Treasury and
backed by the direct "full faith and credit" pledge of the U.S. government.
Treasury securities include bills (maturing in one year or less), notes
(maturing in two to ten years) and bonds (maturing in more than ten years).
Annual Report Glossary 53
[american century logo]
American
Century(sm)
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-Person Assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
American Century Strategic Asset Allocation Funds, Inc.
Investment Manager
American Century Investment Management, Inc.
Kansas City, Missouri
This report and the financial statements contained herein are submitted for
the general information of our shareholders. The report is not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
American Century Investment Services, Inc.
9701 [recycled logo]
SH-BKT-6147 Recycled
